AGREEMENT AND PLAN OF MERGER
AMONG
SBI HOLDING CORPORATION,
SBI RADIO ACQUISITION CORPORATION
AND
SFX BROADCASTING, INC.
DATED AS OF AUGUST 24, 1997
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER....................................................2
SECTION 1.01. The Merger..............................................2
SECTION 1.02. Closing.................................................2
SECTION 1.03. Effective Time..........................................2
SECTION 1.04. Effects of the Merger...................................2
SECTION 1.05. Certificate of Incorporation and By-laws................2
SECTION 1.06. Directors...............................................3
SECTION 1.07. Officers................................................3
ARTICLE II EFFECT OF THE MERGER ON THE SECURITIES OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES............3
SECTION 2.01. Effect on Capital Stock.................................3
SECTION 2.02. Exchange of Certificates................................6
SECTION 2.03. Warrants, Options and SARs..............................7
ARTICLE III REPRESENTATIONS AND WARRANTIES................................9
SECTION 3.01. Representations and Warranties of the Company...........9
SECTION 3.02. Representations and Warranties of Parent and Sub.......26
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS....................29
SECTION 4.01. Conduct of Business....................................29
SECTION 4.02. No Solicitation........................................33
SECTION 4.03. Stockholders Meeting...................................35
SECTION 4.04. Assistance.............................................35
SECTION 4.05. Releases...............................................36
SECTION 4.06. Termination of Certain Affiliate Transactions...........36
ARTICLE V ADDITIONAL AGREEMENTS........................................36
SECTION 5.01. Access to Information; Confidentiality.................36
SECTION 5.02. Reasonable Efforts.....................................37
SECTION 5.03. Benefit Plans..........................................38
SECTION 5.04. Indemnification, Exculpation and Insurance.............39
SECTION 5.05. Fees and Expenses; Deposit.............................40
SECTION 5.06. Public Announcements...................................43
SECTION 5.07. Delsener/Xxxxxx Spin Off...............................43
SECTION 5.08. Repayment of Indebtedness..............................52
SECTION 5.09. Closing Extension......................................52
-i-
SECTION 5.10. [Intentionally Omitted]................................53
SECTION 5.11. Change of Name.........................................53
SECTION 5.12. Outstanding Indebtedness...............................53
SECTION 5.13. Entertainment Business.................................53
ARTICLE VI CONDITIONS PRECEDENT.........................................53
SECTION 6.01. Conditions to Each Party's Obligation To Effect
the Merger.............................................53
SECTION 6.02. Conditions to Obligations of Parent and Sub............54
SECTION 6.03. Conditions to Obligation of the Company................55
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................55
SECTION 7.01. Termination............................................55
SECTION 7.02. Effect of Termination..................................57
ARTICLE VIII GENERAL PROVISIONS...........................................57
SECTION 8.01. Nonsurvival of Representations and Warranties..........57
SECTION 8.02. Notices................................................58
SECTION 8.03. Definitions............................................59
SECTION 8.04. Interpretation.........................................61
SECTION 8.05. Counterparts...........................................61
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries.........61
SECTION 8.07. Governing Law..........................................61
SECTION 8.08. Assignment.............................................62
SECTION 8.09. Enforcement............................................62
SECTION 8.10. Director and Officer Liability.........................62
Annex A Form of Amendment to Company's Certificate of Incorporation
Annex B Form of Release Agreement
Annex C Form of Escrow Agreement
Annex D Form of Letter of Credit
-ii-
AGREEMENT AND PLAN OF MERGER dated as of August 24, 1997, among SBI
Holding Corporation, a Delaware corporation ("Parent"), SBI Radio Acquisition
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
("Sub"), and SFX Broadcasting, Inc., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company, (including a special committee of the Company's independent directors
(the "Independent Committee")), and Parent acting as the sole stockholder of
Sub, have approved the merger of Sub with and into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, as a condition of the willingness of Parent to enter into
this Agreement, the holder (the "Principal Stockholder") of substantially all
of the outstanding Class B Common Stock, par value $.01 per share, of the
Company ("Class B Common Stock"), has entered into the Stockholder Agreement
dated as of the date hereof (the "Stockholder Agreement") with Parent, which
provides, among other things, that, subject to the terms and conditions
thereof, the Principal Stockholder will vote his shares of Common Stock (as
defined in Section 2.01(b)) in favor of the Merger and the approval and
adoption of this Agreement and the transactions contemplated hereby;
WHEREAS, Parent and Sub are unwilling to enter into this Agreement
(and effect the transactions contemplated hereby) unless, contemporaneously
with the execution and delivery hereof, the Principal Stockholder enters into a
Consulting, Non-Compete and Termination Agreement (the "Non-Compete and
Termination Agreement"), which shall establish (i) the terms and provisions
under which such individual's employment contract with the Company shall
terminate and (ii) the terms and provisions of a non-competition agreement
between the Company and such individual and, in order to induce Parent and Sub
to enter into this Agreement, the Company and such individual are executing and
delivering concurrently herewith the Non-Compete and Termination Agreement;
WHEREAS, the Board of Directors of the Company and the Independent
Committee have approved for purposes of Section 203 of the Delaware General
Corporation Law (the "DGCL") the terms of the Stockholder Agreement and the
transactions contemplated thereby;
WHEREAS, the Board of Directors of the Company has approved (and the
Independent Committee has recommended) the amendments to the Certificate of
Incorporation of the Company as contemplated herein and recommended the
adoption of such amendments by the stockholders of the Company; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Sub shall be
merged with and into the Company at the Effective Time (as defined in Section
1.03). Following the Effective Time, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL.
SECTION 1.02. Closing. Subject to the provisions of Article VI, the
closing of the Merger (the "Closing") will take place at the offices of Xxxxx &
XxXxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the earlier of (i) May 31,
1998 (as such date may be extended pursuant to Section 5.09) or (ii) such time,
date or place as Parent shall specify by providing written notice to the
Company at least five (5) business days prior to such date (the "Closing
Date"), provided that in no event shall the Closing take place prior to January
2, 1998.
SECTION 1.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall file a
certificate of Merger or other appropriate documents (in any such case, the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the
DGCL. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Delaware Secretary of State, or at such other
time as Sub and the Company shall agree should be specified in the Certificate
of Merger (the time the Merger becomes effective being hereinafter referred to
as the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
certificate of incorporation of the Company as in effect immediately prior to
the Effective Time shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The by-laws of Sub as in effect at the Effective Time shall be the
by-laws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
-2-
SECTION 1.06. Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE SECURITIES OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of the capital stock of the Company or Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become a number of fully paid and
nonassessable shares of Class A Common Stock, par value $.01 per share, of the
Surviving Corporation equal to the quotient realized by dividing (i) the sum of
the aggregate number of shares of Common Stock (as defined in Section 2.01(b))
determined on a fully-diluted basis immediately prior to the Effective Time by
(ii) the aggregate number of shares of capital stock of Sub issued and
outstanding immediately prior to the Effective Time. The term "on a
fully-diluted basis" shall mean, as of any date, the number of shares of Common
Stock then outstanding (including any Dissenting Shares (as defined in Section
2.01(f)) and shares of Common Stock that are owned by and held in the treasury
of the Company), together with the aggregate number of shares of Common Stock
that the Company may be required, now or in the future, to issue (with or
without notice, lapse of time or the action of any third party) pursuant to any
outstanding securities, options, warrants, commitments, agreements,
arrangements or undertakings of any kind (including, without limitation, the
Warrants, Unit Purchase Options, Options (as such terms are defined in Section
2.03) and all Preferred Stock and assuming the maximum number of shares of
Common Stock issuable thereunder).
(b) Conversion of Common Stock. (i) Each issued and outstanding share
of Class A Common Stock, par value $.01 per share, of the Company ("Class A
Common Stock" and together with the Class B Common Stock, the "Common Stock")
(other than shares to be canceled in accordance with Section 2.01(e) or
Dissenting Shares) shall be converted into the right to receive $75.00, as such
amount may be increased pursuant to Sections 5.07, 5.09 and 5.13 (the "Class A
Common Stock Merger Consideration"), payable to the holder thereof in cash,
without any interest thereon, upon surrender of the certificate representing
such share. As of the Effective Time, all such shares of Class A Common Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any
such shares of Class A Common Stock shall cease to have any rights with respect
thereto, except the right to receive
-3-
the Class A Common Stock Merger Consideration to be paid in consideration
therefor upon surrender of such certificate in accordance with Section 2.02,
without interest.
(ii) Each issued and outstanding share of Class B Common Stock
(other than shares to be canceled in accordance with Section 2.01(e) or
Dissenting Shares) shall be converted into the right to receive $97.50, as such
amount may be increased pursuant to Sections 5.07, 5.09 and 5.13 (the "Class B
Common Stock Merger Consideration"), payable to the holder thereof in cash,
without any interest thereon, upon surrender of the certificate representing
such share. As of the Effective Time, all such shares of Class B Common Stock
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any
such shares of Class B Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Class B Common Stock Merger
Consideration to be paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.02, without interest.
(c) Conversion of the Preferred Stock.
(i) Each issued and outstanding share of Series B Redeemable
Preferred Stock, par value $.01 per share, of the Company ("Series B Preferred
Stock") (other than shares to be canceled in accordance with Section 2.01(e) or
Dissenting Shares) shall be converted into the right to receive $1,000 (the
"Series B Merger Consideration"), payable to the holder thereof in cash,
without any interest thereon, upon surrender of the certificate representing
such share. As of the Effective Time, all such shares of Series B Preferred
Stock shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of Series B Preferred Stock shall cease to have any rights with
respect thereto, except the right to receive the Series B Merger Consideration
to be paid in consideration therefor upon surrender of such certificate in
accordance with Section 2.02, without interest.
(ii) Each issued and outstanding share of Series C Redeemable
Convertible Preferred Stock, par value $.01 per share, of the Company ("Series
C Preferred Stock") (other than shares to be canceled in accordance with
Section 2.01(e) or Dissenting Shares) shall be converted into the right to
receive $1,000, plus any accrued but unpaid dividends (the "Series C Merger
Consideration"), payable to the holder thereof in cash, without any interest
thereon, upon surrender of the certificate representing such share. As of the
Effective Time, all such shares of Series C Preferred Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Series
C Preferred Stock shall cease to have any rights with respect thereto, except
the right to receive the Series C Merger Consideration to be paid in
consideration therefor upon surrender of such certificate in accordance with
Section 2.02, without interest.
(iii) Each issued and outstanding share of Series D Cumulative
Convertible Exchangeable Preferred Stock, par value $.01 per share, of the
Company ("Series D Preferred Stock") (other than shares to be canceled in
accordance with Section 2.01(e) or Dissenting Shares)
-4-
shall be converted into the right to receive an amount equal to the product of
(A) the Class A Common Stock Merger Consideration and (B) the number of shares
of Class A Common Stock into which such share of Series D Preferred Stock would
have been convertible immediately prior to the Effective Time (the "Series D
Merger Consideration"), payable to the holder thereof in cash, without any
interest thereon, upon surrender of the certificate representing such share. As
of the Effective Time, all such shares of Series D Preferred Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
of Series D Preferred Stock shall cease to have any rights with respect
thereto, except the right to receive the Series D Merger Consideration to be
paid in consideration therefor upon surrender of such certificate in accordance
with Section 2.02, without interest.
(iv) Each issued and outstanding share of 125/8% Series E
Cumulative Exchangeable Preferred Stock, par value $.01 per share, of the
Company ("Series E Preferred Stock" and together with the Series B Preferred
Stock, the Series C Preferred Stock and the Series D Preferred Stock, the
"Preferred Stock") shall continue to be outstanding subsequent to the Effective
Time as Series E Cumulative Exchangeable Preferred Stock of the Surviving
Corporation, having in respect of the Surviving Corporation the same powers,
preferences and relative participating, optional and other special rights and
the qualifications, limitations and restrictions thereof that the Series E
Preferred Stock had in respect of the Company immediately prior to the
Effective Time.
(d) Senior Notes.
(i) The 10 3/4% Senior Subordinated Notes due 2006 (the "2006
Notes") that are outstanding at the Effective Time shall continue to be
outstanding subsequent to the Effective Time as debt instruments of the
Surviving Corporation, having in respect of the Surviving Corporation the same
terms and conditions thereof that the Notes had in respect of the Company
immediately prior to the Effective Time.
(ii) The 113/8% Senior Subordinated Notes due 2000 (the "2000
Notes") that are outstanding at the Effective Time shall continue to be
outstanding subsequent to the Effective Time as debt instruments of the
Surviving Corporation, having in respect of the Surviving Corporation the same
terms and conditions thereof that the Notes had in respect of the Company
immediately prior to the Effective Time. The 2006 Notes and the 2000 Notes are
collectively referred to herein as the "Notes."
(e) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Common Stock and Preferred Stock (other than Series E Preferred Stock) that
is owned by the Company or by any Subsidiary of the Company and each share of
Common Stock and Preferred Stock (other than Series E Preferred Stock) that is
owned by Parent, Sub or any other Subsidiary of Parent shall automatically be
canceled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
-5-
(f) Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of Common Stock and Preferred Stock (other than Series E
Preferred Stock) that are issued and outstanding immediately prior to the
Effective Time and that are held by stockholders who have properly exercised
appraisal rights with respect thereto under Section 262 of the DGCL (the
"Dissenting Shares") shall not be converted into the right to receive the
consideration therefor specified in this Section 2.01, but the holders of
Dissenting Shares shall be entitled to receive such payment as shall be
determined pursuant to Section 262 of the DGCL; provided, however, that if any
such holder shall have failed to perfect or shall withdraw or lose the right to
appraisal and payment under the DGCL, each such holder's shares of Common Stock
or Preferred Stock shall thereupon be deemed to have been converted as of the
Effective Time into the right to receive the consideration therefor specified
in this Section 2.01, without any interest thereon, as provided in Section
2.02, and such shares shall no longer be Dissenting Shares.
SECTION 2.02. Exchange of Certificates.
(a) Paying Agent. At or prior to the Effective Time, Parent shall
enter into an agreement with a bank or trust Company mutually acceptable to
Parent and the Company (the "Paying Agent"), which shall provide that Parent
shall deposit with the Paying Agent as of the Effective Time, for the benefit
of the holders of shares of Common Stock and Preferred Stock (other than Series
E Preferred Stock) for exchange in accordance with this Article II, through the
Paying Agent, cash in the aggregate amount required to make the cash payments
specified in Section 2.01, in respect of (i) the Common Stock issued and
outstanding at the Effective Time (other than Dissenting Shares and shares
canceled in accordance with Section 2.01(e)) and (ii) the Preferred Stock
(other than Series E Preferred Stock) issued and outstanding at the Effective
Time (other than Dissenting Shares and shares canceled in accordance with
Section 2.01(e)), such sum being hereinafter referred to as the "Exchange
Fund." The Paying Agent shall, pursuant to irrevocable instructions, deliver
cash in exchange for surrendered certificates representing Common Stock or
Preferred Stock (other than Series E Preferred Stock).
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time but no later than three business days following the Effective
Time, the Paying Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Common Stock or Preferred Stock (other than Series E
Preferred Stock) (the "Certificates"), (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the consideration payable therefor pursuant to
Section 2.01. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the cash which such holder
has the right to receive pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be canceled. If any holder of
-6-
Common Stock or Preferred Stock (other than Series E Preferred Stock) shall be
unable to surrender such holder's Certificates because such Certificates have
been lost, stolen or destroyed, such holder may deliver in lieu thereof an
affidavit and indemnity agreement in form and substance reasonably satisfactory
to the Parent. In the event of a transfer of ownership of Common Stock or
Preferred Stock (other than Series E Preferred Stock) which is not registered
in the transfer records of the Company, cash representing the consideration
payable pursuant to Section 2.01 may be paid to a Person other than the Person
in whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
Person requesting such payment shall pay any transfer or other Taxes required
by reason of payment of the consideration specified in Section 2.01 to a Person
other than the registered holder of such Certificate or establish to the
satisfaction of Parent that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.02, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the consideration specified in this Article II. No
interest will be paid or will accrue on any cash payable to holders of
Certificates pursuant to the provisions of this Article II.
(c) Transfer Books. At and after the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the shares of Common
Stock or Preferred Stock (other than Series E Preferred Stock) which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for one year
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of the Certificates who have not theretofore complied with this Article
II shall thereafter look only to Parent for payment of the consideration
therefor specified in this Article II.
(e) No Liability. None of Parent, Sub, the Company or the Paying Agent
shall be liable to any Person in respect of any cash from the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(f) Investment of Exchange Fund. The Paying Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis,
provided that any such investment is guaranteed as to payment of principal and
interest by the federal government of the United States. Any interest and other
income resulting from such investments shall be paid to Parent.
SECTION 2.03. Warrants, Options and SARs.
(a) At the Effective Time, each then outstanding warrant to purchase
shares of Common Stock granted by the Company (i) pursuant to that certain
Warrant Agreement dated March 23, 1994 by and among Multi-Market Radio, Inc.
("MMR"), American Stock Transfer & Trust
-7-
Company, X.X. Xxxxx Investment Banking Corp. and Americorp Securities, Inc.
(the "Public Warrants"), (ii) to the underwriters of MMR's initial public
offering dated July 28, 1993 (the "IPO Warrants"), (iii) to The Xxxx
Alternative Income Fund, L.P. dated November 22, 1996 (the "Xxxx Warrants"),
(iv) upon exercise of those certain unit purchase options (the "Unit Purchase
Option Warrants") issued by the Company and dated March 23, 1994 and (v) to
Sillerman Communications Management Corporation dated April 15, 1996 (the "SCMC
Warrants," and together with the Public Warrants, the IPO Warrants, the Xxxx
Warrants and the Unit Purchase Option Warrants, the "Warrants") shall continue
to be outstanding subsequent to the Effective Time subject to the respective
terms and conditions of the agreements relating thereto and shall thereafter be
exercisable for cash and, to the extent provided in Section 5.07, stock of
Delsener/Xxxxxx Holdings (as defined in Section 5.07).
(b) Each then outstanding unit purchase option dated March 23, 1994
(the "Unit Purchase Options") shall continue to be outstanding subsequent to
the Effective Time subject to the respective terms and conditions of the
agreements relating thereto and shall thereafter be exercisable for cash.
(c) Effective as of the Effective Time:
(i) Each then outstanding (A) option to purchase shares of Common
Stock granted by the Company pursuant to the Company's 1993 Stock Option Plan,
the Company's 1994 Stock Option Plan, the Company's 1995 Stock Option Plan, the
Company's 1996 Stock Option Plan, the Company's 1997 Stock Option Plan, MMR's
1993 Stock Option Plan, MMR's 1994 Stock Option Plan and MMR's 1995 Stock
Option Plan (collectively, the "Stock Plans") (whether or not then presently
exercisable) and (B) option to purchase Class A Common Stock granted to Xxxxxx
F.X. Sillerman or Xxxxxxx X. Xxxxxx other than pursuant to a Stock Plan
(collectively, the "Options") (whether or not then presently exercisable) shall
be canceled, and each holder of a canceled Option shall be entitled to receive,
as soon as practicable after the Effective Time, in consideration for the
cancellation of such Option, an amount in cash, without any interest thereon,
for each share of Class A Common Stock subject to such Option, equal to the
difference between the Class A Common Stock Merger Consideration and the per
share exercise price of such Option to the extent such difference is a positive
number, less any applicable withholding Taxes (as defined in Section
3.01(j)(viii)). The aggregate consideration payable to each Option holder shall
be rounded up to the nearest xxxxx.
(ii) Each then outstanding stock appreciation right with respect
to shares of Common Stock granted by the Company (whether or not presently
exercisable) (collectively, the "SARs") shall be canceled, and each holder of a
canceled SAR shall be entitled to receive, as soon as practicable after the
Effective Time, in consideration for the cancellation of such SAR, an amount in
cash, without any interest thereon, for each share of Common Stock subject to
such SAR, equal to the difference between the Class A Common Stock Merger
Consideration and the per share base price of such SAR to the extent such
difference is a positive number, less any applicable withholding
-8-
Taxes. The aggregate consideration payable to each SAR holder shall be rounded
up to the nearest xxxxx.
(d) The surrender of a Warrant, Unit Purchase Option, Option or SAR to
the Company in exchange for the consideration set forth in this Section 2.03
shall, to the extent permitted by law, be deemed a release of any and all
rights the holder had or may have had in respect of such Warrant, Unit Purchase
Option, Option or SAR.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of the Company
and each of its Significant Subsidiaries (as defined in Section 8.03(i)) is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated or
organized and has the requisite corporate or other power and authority to carry
on its business as now being conducted. Each of the Company and each of its
Significant Subsidiaries is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed or to be in good standing individually or in the
aggregate would not have a Material Adverse Effect (as defined in Section
8.03(f)) on the Company. The Company has delivered to Parent prior to the
execution of this Agreement complete and correct copies of its certificate of
incorporation and by-laws, as in effect on the date of this Agreement, and the
certificates of incorporation and by-laws (or comparable organizational
documents) of its Significant Subsidiaries, in each case as amended to date.
(b) Subsidiaries. As of the date hereof, Section 3.01(b)(i) of the
Company Disclosure Schedule (as defined in Section 8.03(n)) sets forth a true
and complete list of each Subsidiary of the Company. Except as set forth in
Section 3.01(b)(ii) of the Company Disclosure Schedule, all the outstanding
shares of capital stock of, or other ownership interests in, each Subsidiary of
the Company have been validly issued and (with respect to corporate
Subsidiaries) are fully paid and nonassessable and are owned directly or
indirectly by the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). Except for the capital stock of its Subsidiaries and
the partnership interests listed in Section 3.01(b)(iii) of the Company
Disclosure Schedule, as of the date hereof, the Company does not own, directly
or indirectly, any capital stock or other ownership interest in any
corporation, limited liability company, partnership, joint venture or other
entity.
-9-
(c) Capital Structure. The authorized capital stock of Company
consists of 100,000,000 shares of Class A Common Stock, 10,000,000 shares of
Class B Common Stock, 1,200,000 shares of Class C Common Stock, par value $.01
per share, of the Company ("Class C Common Stock"), and 10,010,000 shares of
Preferred Stock. As of June 30, 1997, (i) 8,394,568 shares of Class A Common
Stock were issued and outstanding (other than shares issued after June 30,
1997, the issuance of which would have been permitted under Section 4.01(a)(ii)
if done following the date of this Agreement), (ii) 1,047,037 shares of Class B
Common Stock were issued and outstanding, (iii) no shares of Class C Common
Stock were issued and outstanding, (iv) 2,000 shares of Series B Preferred
Stock were issued and outstanding, (v) 2,000 shares of Series C Preferred Stock
were issued and outstanding, (vi) 2,990,000 shares of Series D Preferred Stock
were issued and outstanding (as such number may be reduced pursuant to the
parenthetical contained in clause (i) above) and (vii) 2,250,000 shares of
Series E Preferred Stock were issued and outstanding. Except as set forth in
Section 3.01(c)(i) of the Company Disclosure Schedule and except for options
that may be granted as permitted under clause (F) of Section 4.01(a)(ii), there
are no outstanding stock appreciation rights or rights to receive shares of
Common Stock or Preferred Stock granted under the Stock Plans or otherwise.
Section 3.01(c)(i) of the Company Disclosure Schedule sets forth a complete and
correct list, as of June 30, 1997, of the holders of all options, and the
number, class and series of shares subject to each such option and the exercise
prices thereof. Since June 30, 1997, the Company has not issued any (i) Common
Stock, other than Common Stock that was issued upon the exercise, conversion or
exchange of Options, Warrants, Unit Purchase Options and other securities which
were outstanding on June 30, 1997, or (ii) securities which are exercisable for
or convertible or exchangeable into Common Stock. All outstanding shares of
capital stock of the Company are, and all shares which may be issued will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. Except for the Options, Warrants, Unit
Purchase Options and Preferred Stock (as to which no more than 6,371,649 shares
of Class A Common Stock (as such number may be reduced pursuant to the
parenthetical contained in clause (i) above) and no shares of Class B Common
Stock are issuable thereunder) and except as set forth above or in Section
3.01(c)(i) of the Company Disclosure Schedule, and except for options that may
be granted as permitted under clause (F) of Section 4.01(a)(ii), there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company or
any of its Subsidiaries is a party or by which any of them is bound obligating
the Company or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other
voting securities of the Company or of any of its Subsidiaries or obligating
the Company or any of its Subsidiaries to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. Except as set forth in Section 3.01(c)(i) of the
Company Disclosure Schedule, there are no outstanding contractual obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its Subsidiaries.
Except for the redemption and repurchase obligations with respect to the
Preferred Stock set forth in the Company's certificate of incorporation and
except as contemplated hereby or as set forth in Section 3.01(c)(ii) of the
Company Disclosure Schedule, there are no outstanding contractual obligations
of the Company to vote or to dispose of any shares of the capital stock of any
of its Subsidiaries.
-10-
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to enter into this Agreement (collectively with
the Stockholders Agreement, the Escrow Agreement (as defined in Section
5.05(f)) and the Non-Compete and Termination Agreement, the "Transaction
Documents") and, subject to the Stockholder Approval (as defined in Section
3.01(k)), to consummate the transactions contemplated by the Transaction
Documents. The execution and delivery of the Transaction Documents by the
Company and the consummation by the Company of the transactions contemplated by
the Transaction Documents (including the "Amendments" as defined in this
Section 3.01(d)) have been duly authorized by all necessary corporate action on
the part of the Company, subject to the Stockholder Approval. Each of the
Transaction Documents has been duly executed and delivered by the Company and,
subject to the Stockholder Approval, constitutes a valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
Except as disclosed in Section 3.01(d)(i) of the Company Disclosure Schedule,
the execution and delivery of the Transaction Documents do not, and compliance
with the provisions of the Transaction Documents will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of the Company
or any of its Subsidiaries under, (i) subject to the adoption of the
Amendments, the certificate of incorporation or by-laws of the Company or the
comparable organizational documents of any of its Subsidiaries, (ii) subject to
the consents and other matters referred to in the following sentence, any loan
or credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or any of its Subsidiaries or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights, Liens, judgments,
orders, decrees, statutes, laws, ordinances, rules or regulations that
individually or in the aggregate would not (x) have a Material Adverse Effect
on the Company, (y) impair the ability of the Company to perform its
obligations under any of the Transaction Documents in any material respect or
(z) delay in any material respect or prevent the consummation of any of the
transactions contemplated by the Transaction Documents. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Federal, state or local government or any court, administrative or regulatory
agency or commission or other governmental authority or agency (a "Governmental
Entity") or other Person, is required by or with respect to the Company or any
of its Subsidiaries in connection with the execution and delivery of the
Transaction Documents by the Company or the consummation by the Company of the
transactions contemplated by the Transaction Documents, except for (1) the
filing of a premerger notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); (2) the filing with the Securities and Exchange Commission (the "SEC")
of (A) a proxy statement relating to the Stockholders Meeting (as defined in
Section 4.03), as amended or supplemented from time to time (the "Proxy
Statement"), (B) if necessary, a registration statement on the appropriate form
(the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), in respect of the transactions contemplated in Section
5.07 and (C) such reports under Section
-11-
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as may be required in connection with the Transaction
Documents and the transactions contemplated by the Transaction Documents; (3)
the filing of the Certificate of Merger with the Delaware Secretary of State
and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business; (4) the filing of a certificate
of amendment relating to the amendments to the Company's certificate of
incorporation as contemplated by Annex A (the "Amendments") with the Secretary
of State of Delaware; (5) such filings with and approvals of the Federal
Communications Commission or any successor entity (the "FCC") as may be
required under the Communications Act of 1934, as amended, and the rules,
regulations and policies of the FCC thereunder (collectively, the
"Communications Act"), including filings and approvals in connection with the
transfer of control of the FCC Licenses (as defined in Section 3.01(q)); (6)
such other filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure
or required approval necessitated by the Merger or the transactions
contemplated by the Transaction Documents; (7) such consents, approvals, orders
or authorizations the failure of which to be made or obtained would not
reasonably be expected to have a Material Adverse Effect on the Company, impair
the ability of the Company to perform its obligations under this Agreement in
any material respect or delay in any material respect or prevent the
consummation of the transactions contemplated by the Transaction Documents; and
(8) as disclosed in Section 3.01(d)(ii) of the Company Disclosure Schedule.
(e) SEC Documents; Undisclosed Liabilities. The Company has filed all
required reports, schedules, forms, statements and other documents with the SEC
since January 1, 1995 (the "Company SEC Documents"). As of their respective
dates, the Company SEC Documents complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Documents, and none of the Company SEC Documents when filed
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any Company
SEC Document has been revised or superseded by a later filed Company SEC
Document, none of the Company SEC Documents contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC and
pro forma financial statements as required by SEC Regulation S-X) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth on Section 3.01(e) of
the Company Disclosure Schedule or in the Filed SEC Documents
-12-
(as defined in Section 3.01(f)), and except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice,
since June 30, 1997 to the date hereof, neither the Company nor any of its
Subsidiaries has any material liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by generally accepted
accounting principles to be recognized or disclosed on a consolidated balance
sheet of the Company and its consolidated Subsidiaries or in the notes thereto.
(f) Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (as amended to the date of this Agreement, the "Filed SEC
Documents"), as contemplated by this Agreement or in Section 3.01(f) of the
Company Disclosure Schedule, since June 30, 1997, the Company has conducted its
business only in the ordinary course consistent with past practice, and there
has not been (i) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock other than regular cash dividends on shares of
Preferred Stock, (ii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iii) (x) any granting by the Company to any executive officer
or other key employee of the Company of any increase in compensation, except
for normal increases in the ordinary course of business consistent with past
practice or as required under employment or other agreements or benefit
arrangements in effect as of the date of the most recent audited financial
statements included in the Filed SEC Documents or (y) any granting by the
Company to any such executive officer of any increase in severance or
termination pay, except as was required under any employment, severance,
termination or other agreements or benefit arrangements in effect as of June
30, 1997, (iv) except as required by a change in generally accepted accounting
principles, any change in accounting methods, principles or practices by the
Company materially affecting its assets, liabilities or business or (v) any
event, circumstance, or fact that has resulted in a Material Adverse Change in
the Company.
(g) Litigation. Except as disclosed in the Filed SEC Documents or in
Section 3.01(g) of the Company Disclosure Schedule, there is no suit, action,
proceeding or indemnification claim (including any proceeding by or before the
FCC but excluding proceedings of general applicability to the radio industry)
pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries that individually or in the aggregate
could reasonably be expected to either (i) have a Material Adverse Effect on
the Company, (ii) impair the ability of the Company to perform its obligations
under the Transaction Documents in any material respect or (iii) delay in any
material respect or prevent the consummation of any of the transactions
contemplated by the Transaction Documents, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against the Company or any of its Subsidiaries having, or which could
reasonably be expected to have, any effect referred to in clause (i), (ii) or
(iii) above, except for any suit, action or proceeding asserted after the date
hereof by any stockholders of the Company in connection with any of the
transactions contemplated by the Transaction Documents.
-13-
(h) Absence of Changes in Benefit Plans. Except (x) as disclosed in
the Filed SEC Documents or in Section 3.01(h) of the Company Disclosure
Schedule, (y) for normal increases in the ordinary course of business
consistent with past practice or as required by law or (z) as contemplated by
this Agreement, since June 30, 1997, there has not been any adoption or
amendment in any material respect by the Company or any of its significant
Subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other material plan
providing material benefits to any current or former employee, officer or
director of the Company or any of its Subsidiaries. Without limiting the
foregoing, except as disclosed in the Filed SEC Documents or in Section 3.01(h)
of the Company Disclosure Schedule, since June 30, 1997, there has not been any
change in any actuarial or other assumption used to calculate funding
obligations with respect to any Pension Plan (as defined below), or in the
manner in which contributions to any Pension Plan are made or the basis on
which such contributions are determined. Except as disclosed in the Filed SEC
Documents or in Section 3.01(h) of the Company Disclosure Schedule, there exist
no employment, consulting or severance agreements currently in effect between
the Company and any current or former employee, officer or director of the
Company providing for annual base compensation or payments in excess of
$100,000.
(i) ERISA Compliance. Except as disclosed in Section 3.01(i) of the
Company Disclosure Schedule or as otherwise disclosed to Parent or Sub:
(i) The Company has delivered or made available to Parent each
"employee pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (a "Pension
Plan"), each "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA) (a "Welfare Plan"), each stock option, stock purchase, deferred
compensation plan or arrangement and each other employee fringe benefit plan or
arrangement maintained, contributed to or required to be maintained or
contributed to by the Company, any of its Significant Subsidiaries or any other
Person or entity that, together with the Company, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the United States Internal
Revenue Code of 1986, as amended (the "Code"), (each, a "Commonly Controlled
Entity") which is currently in effect for the benefit of any current or former
employees, officers, directors or independent contractors of the Company or any
of its Subsidiaries or with respect to which the Company or any Commonly
Controlled Entity has any material contingent liability (collectively, "Benefit
Plans"). The Company has delivered or made available to Parent true, complete
and correct copies of (w) the most recent annual report on Form 5500 filed with
the Internal Revenue Service with respect to each Benefit Plan for which the
filing of any such report is required by ERISA or the Code, (x) the most recent
summary plan description for each Benefit Plan for which the preparation of any
such summary plan description is required by ERISA, (y) each currently
effective trust agreement, insurance or group annuity contract and each other
funding or financing arrangement relating to any Benefit Plan and (z) a
schedule of employer expenses with respect to each Benefit Plan for the current
plan year of each Benefit Plan.
-14-
(ii) Each Benefit Plan has been administered in material
compliance with its terms, the applicable provisions of ERISA, the Code and all
other applicable laws and the terms of all applicable collective bargaining
agreements. To the knowledge of the Company, there are no investigations by any
governmental agency, termination proceedings or other claims (except routine
claims for benefits payable under the Benefit Plans), suits or proceedings
pending or threatened against any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan that, individually or in the
aggregate, is reasonably likely to result in a Material Adverse Effect on the
Company.
(iii) (A) There has been no application for waiver of the minimum
funding standards imposed by Section 412 of the Code with respect to any
Pension Plan and (B) no Pension Plan has or had at any time during the current
plan year an "accumulated funding deficiency" within the meaning of Section
412(a) of the Code.
(iv) Each Pension Plan that is intended to be a tax-qualified plan
has been the subject of a determination letter from the Internal Revenue
Service to the effect that such Pension Plan and related trust is qualified and
exempt from Federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code; to the knowledge of the Company, no such
determination letter has been revoked, revocation of such letter has not been
threatened nor has such Pension Plan been amended since the effective date of
its most recent determination letter in any respect that would adversely affect
its qualification. The Company has delivered or made available to Parent a copy
of the most recent determination letter received with respect to each Pension
Plan for which such a letter has been issued, as well as a copy of any pending
application for a determination letter. To the knowledge of the Company, no
event has occurred that could subject any Pension Plan to any tax under Section
511 of the Code that individually, or in the aggregate, will result in a
Material Adverse Effect on the Company.
(v) (A) Neither the Company nor any of its Significant
Subsidiaries has engaged in a "prohibited transaction" (as defined in Section
4975 of the Code or Section 406 of ERISA) that involves the assets of any
Benefit Plan that is reasonably likely to subject the Company, any of its
Significant Subsidiaries, any employee of the Company or its Significant
Subsidiaries or, to the knowledge of the Company, a non-employee trustee,
non-employee administrator or other non-employee fiduciary of any trust created
under any Benefit Plan to any tax or penalty on prohibited transactions imposed
by Section 4975 of the Code that individually, or in the aggregate, is
reasonably likely to result in a Material Adverse Effect on the Company; (B)
within the past five years, no Pension Plan that is subject to Title IV of
ERISA has been terminated other than in a standard termination in accordance
with Section 4041(b) of ERISA (a "Standard Termination") or, to the knowledge
of the Company, has been the subject of a "reportable event" (as defined in
Section 4043 of ERISA and the regulations thereunder) and no such Pension Plan
is reasonably expected to be terminated other than in a Standard Termination;
and (C) none of the Company, any of its Significant Subsidiaries or, to the
knowledge of the Company, any non-employee trustee, non-employee administrator
or other non-employee fiduciary of any Benefit Plan has breached the
-15-
fiduciary duty provisions of ERISA or any other applicable law in a manner
that, individually or in the aggregate, is reasonably likely to, result in a
Material Adverse Effect on the Company.
(vi) As of the most recent valuation date for each Pension Plan
that is a "defined benefit pension plan" (as defined in Section 3(35) of
ERISA)(a "Defined Benefit Plan"), there was not any amount of "unfunded benefit
liabilities" (based upon the plan's ongoing actuarial assumptions used for
funding purposes as set forth in the most recent actuarial report or valuation)
under such Defined Benefit Plan in excess of $100,000 and the aggregate amount
of all such unfunded benefit liabilities under all such Defined Benefit Plans
as of such date did not exceed $100,000, and there are no facts or
circumstances that would materially change the funded status of any such
Defined Benefit Plan as of the date hereof. The Company has furnished to Parent
the most recent actuarial report or valuation with respect to each Defined
Benefit Plan. To the knowledge of the Company, the information supplied to the
plan actuary by the Company and any of its Subsidiaries for use in preparing
those reports or valuations was complete and accurate in all material respects.
(vii) No Commonly Controlled Entity has incurred any liability
under Title IV of ERISA (other than for contributions not yet due to a Defined
Benefit Plan and other than for the payment of premiums to the Pension Benefit
Guaranty Corporation not yet due), which liability, to the extent currently
due, has not been fully paid as of the date hereof and would not, individually
or in the aggregate, be reasonably likely to result in a Material Adverse
Effect on the Company.
(viii) No Commonly Controlled Entity has engaged in a transaction
described in Section 4069 of ERISA that could subject the Company to liability
at any time after the date hereof that individually, or in the aggregate, is
reasonably likely to result in a Material Adverse Effect on the Company.
(ix) No Commonly Controlled Entity has withdrawn from any multi-
employer plan (as defined in Section 3(37) or 4001(a)(3) of ERISA) where such
withdrawal has resulted in any "withdrawal liability" (as defined in Section
4201 of ERISA) that has not been fully paid.
(x) Prior to the date hereof, the Company has made available to
Parent copies of all agreements and Benefit Plans under which any employee of
the Company or any of its Subsidiaries will be entitled to any additional
benefits or any acceleration of the time of payment or vesting of any benefits
under any Benefit Plan or under any employment, severance, termination or
compensation agreement as a result of the transactions contemplated by this
Agreement and Section 3.01(i) of the Company Disclosure Schedule sets forth any
severance payments contained in such agreements or Benefit Plans which provide
for payments in excess of $100,000 to any such employee.
-16-
(xi) No Benefit Plan provides that payments pursuant to such
Benefit Plan may be made in securities of a Commonly Controlled Entity, nor
does any trust maintained pursuant to any Benefit Plan hold any securities of a
Commonly Controlled Entity.
(xii) Notwithstanding any of the foregoing to the contrary, the
representations and warranties of this Section 3.01(i), other than clauses (i)
and (ix), shall not apply to any multi-employer plan (as defined in Section
3(37) or 4001(a)(3) of ERISA), nor shall they apply with respect to any actions
or omissions of a Pension Plan prototype plan sponsor of which the Company has
no knowledge.
(j) Taxes.
(i) Each of the Company, its Subsidiaries and any affiliated,
consolidated, combined, unitary or similar group of which the Company or any of
its Subsidiaries is or was a member (a "Tax Group") has filed all tax returns
and reports required to be filed by it or requests for extensions to file such
returns or reports have been timely filed, granted and have not expired, except
to the extent that such failures to file or to have extensions granted that
remain in effect individually or in the aggregate would not have a Material
Adverse Effect on the Company. All returns filed by the Company, each of its
Subsidiaries and any Tax Group are complete and accurate in all material
respects to the knowledge of the Company. The Company and each of its
Subsidiaries has paid (or the Company has paid on its behalf) all Taxes shown
as due on such returns, and the most recent financial statements contained in
the Filed SEC Documents reflect an adequate reserve for all Taxes payable by
the Company and its Subsidiaries for all taxable periods and portions thereof
accrued through the date of such financial statements.
(ii) No deficiencies for any Taxes have been proposed, asserted or
assessed against the Company or any of its Subsidiaries that are not adequately
reserved for, except for deficiencies that individually or in the aggregate
would not have a Material Adverse Effect on the Company, and no requests for
waivers of the time to assess any such Taxes have been granted or are pending
that individually or in the aggregate would have a Material Adverse Effect on
the Company. The statute of limitations on assessment or collection of any
Federal income taxes due from the Company, any of its Subsidiaries or any Tax
Group has expired for all taxable years of the Company, any of its Subsidiaries
or any Tax Group through 1991. No audit or other proceeding by any court,
governmental or regulatory authority or similar Person is pending in regard to
any material Taxes due from or with respect to the Company or any of its
Subsidiaries or any material tax return filed by, or with respect to the
Company, any of its Subsidiaries or any Tax Group, other than normal and
routine audits by non-federal governmental authorities. None of the assets or
properties of the Company or any of its Subsidiaries is subject to any tax
lien, other than any such liens for Taxes which are not yet due and payable,
which may thereafter be paid without penalty or the validity of which is being
contested in good faith by appropriate proceedings and for which adequate
reserves are being maintained in accordance with generally accepted accounting
principles ("Permitted Tax Liens").
-17-
(iii) No consent to the application of Section 341(f)(2) of the
Code (or any predecessor provision) has been made or filed by or with respect
to the Company or, for so long as the Company has owned any Subsidiary, by or
with respect to such Subsidiary. None of the Company or any of its Subsidiaries
has agreed to make any material adjustment pursuant to Section 481(a) of the
Code (or any predecessor provision) by reason of any change in any accounting
method, and there is no application pending with any taxing authority
requesting permission for any changes in any accounting method of the Company
or any of its Subsidiaries which, in each respective case, will or would
reasonably cause the Company or any of its Subsidiaries to include any material
adjustment in taxable income for any taxable period (or portion thereof) ending
after the Closing Date.
(iv) Except as set forth in the Filed SEC Documents, neither the
Company nor any of its Subsidiaries is a party to, is bound by, or has any
obligation under, any tax sharing agreement, tax allocation agreement or
similar contract, agreement or arrangement.
(v) Neither the Company nor any of its Subsidiaries has executed
or entered into with the Internal Revenue Service, or any taxing authority, a
Closing agreement pursuant to Section 7121 of the Code or any similar provision
of state, local, foreign or other income tax law, which will require any
increase in taxable income or alternative minimum taxable income, or any
reduction in tax credits for, the Company or any of its Subsidiaries for a
taxable period ending after the Closing Date.
(vi) As of June 30, 1997, the Company's adjusted basis for federal
income tax purposes in the stock of Delsener/Xxxxxx (as defined in Section
5.07) was at least $100,000,000.
(vii) As of June 30, 1997, the Tax Group had a net operating loss
carry forward of at least $40,000,000.
(viii) As used in this Agreement, "Taxes" shall include all
Federal, state and local income, franchise, use, property, sales, excise and
other taxes, tariffs or governmental charges of any nature whatsoever, domestic
or foreign, including any interest, penalties or additions with respect
thereto.
(k) Voting Requirements. The affirmative vote of the holders of a
majority of the voting power of all outstanding shares of Common Stock voting
as a single class, and the affirmative vote of the holders of a majority of the
voting power of all outstanding shares of Class A Common Stock and Series D
Preferred Stock, each voting as a separate class, at the Stockholders Meeting
are the only votes of holders of any class or series of the Company's capital
stock necessary to approve or adopt the Amendments. Subject to the approval and
adoption of the Amendments by the stockholders of the Company, the affirmative
vote of the holders of a majority of the voting power of all outstanding shares
of Common Stock, voting as a single class, at the Stockholders Meeting is the
only vote of the holders of any class or series of Company's capital stock
necessary to approve
-18-
and adopt this Agreement and the Merger. The votes required in the preceding
two sentences are collectively referred to herein as the "Stockholder
Approval."
(l) State Takeover Statutes. The Board of Directors of the Company has
approved the terms of this Agreement and the Stockholder Agreement and the
consummation of the Merger and the other transactions contemplated by this
Agreement and the Stockholder Agreement, and such approval is sufficient to
render inapplicable to the Merger and the other transactions contemplated by
this Agreement and the Stockholder Agreement the provisions of Section 203 of
the DGCL. To the Company's knowledge, no other state takeover statute or
similar statute or regulation applies or purports to apply to the Merger, this
Agreement, the Stockholder Agreement or any of the transactions contemplated by
this Agreement or the Stockholder Agreement and no provision of the certificate
of incorporation, by-laws or other governing instruments of the Company or any
of its Subsidiaries would, directly or indirectly, restrict or impair the
ability of Parent to vote, or otherwise to exercise the rights of a stockholder
with respect to, shares of the Company and its Subsidiaries that may be
acquired or controlled by Parent.
(m) Labor Matters. Neither the Company nor any of its Subsidiaries is
the subject of any suit, action or proceeding which is pending or, to the
knowledge of the Company, threatened, asserting that the Company or any of its
Subsidiaries has committed an unfair labor practice (within the meaning of the
National Labor Relations Act or applicable state statutes) or seeking to compel
the Company or any of its Subsidiaries to bargain with any labor organization
as to wages and conditions of employment, in any such case, that is reasonably
expected to result in a material liability of the Company and its Subsidiaries.
No strike or other labor dispute involving the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened, and,
to the knowledge of the Company, there is no activity involving any employees
of the Company or any of its Subsidiaries seeking to certify a collective
bargaining unit or engaging in any other organizational activity, except for
any such dispute or activity which would not have a Material Adverse Effect on
the Company.
(n) Opinion of Financial Advisor. Xxxxxx Brothers has reviewed, among
other things, this Agreement and the other Transaction Documents. The Company
has received the opinion of Xxxxxx Brothers dated the date of this Agreement,
to the effect that, as of such date, the Class A Common Stock Merger
Consideration is fair to the holders of the Class A Common Stock from a
financial point of view, a copy of which opinion has been delivered to Parent.
(o) Compliance with Applicable Laws. Each of the Company and each of
its Subsidiaries has in effect all Federal, state and local governmental
approvals, authorizations, certificates, filings, franchises, licenses,
notices, permits and rights ("Permits") necessary for it to own, lease or
operate its properties and assets and to carry on its business as now
conducted, and there has occurred no default under any such Permit, except for
the lack of Permits and for defaults under Permits which lack or default
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Company, impair the ability of the Company to
perform its obligations under this Agreement in any material respect or delay
in any material respect
-19-
or prevent the consummation of the transactions contemplated by this Agreement.
Except as disclosed in the Filed SEC Documents, the Company and its
Subsidiaries are in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, except for possible
noncompliance which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company, impair the ability
of the Company to perform its obligations under this Agreement in any material
respect or delay in any material respect or prevent the consummation of the
transactions contemplated by this Agreement.
(p) Contracts; Debt Instruments.
(i) Neither the Company nor any of its Subsidiaries is in
violation of or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice would cause such a violation of or
default under) any loan or credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Company, impair the ability of the Company to
perform its obligations under this Agreement in any material respect or delay
in any material respect or prevent the consummation of the transactions
contemplated by this Agreement. The agreements described in Section 3.01(p) of
the Company Disclosure Schedule are in full force and effect and are binding on
the parties thereto.
(ii) The Company has made available to Parent (x) true and correct
copies of all loan or credit agreements, notes, bonds, mortgages, indentures
and other agreements and instruments pursuant to which any Indebtedness of the
Company or any of its Subsidiaries in an aggregate principal amount in excess
of $600,000 is outstanding or may be incurred and (y) accurate information
regarding the respective principal amounts currently outstanding thereunder.
For purposes of this Agreement,"Indebtedness" shall mean, with respect to any
Person, without duplication, (A) all obligations of such Person for borrowed
money, or with respect to deposits or advances of any kind to such Person, (B)
all obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person, (D)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services (excluding obligations of such Person to creditors for
raw materials, inventory, services and supplies incurred in the ordinary course
of such Person's business), (E) all capitalized lease obligations of such
Person, (F) all obligations of others secured by a Lien on property or assets
owned or acquired by such Person, whether or not the obligations secured
thereby have been assumed, (G) all obligations of such Person under interest
rate or currency hedging transactions (valued at the termination value
thereof), (H) all letters of credit issued for the account of such Person and
(I) all guarantees and arrangements having the economic effect of a guarantee
of such Person of any Indebtedness of any other Person.
-20-
(q) FCC Licenses; Operations of Licensed Facilities. The Company and
its Subsidiaries have operated the radio stations for which the Company or any
of its Subsidiaries holds licenses from the FCC (the "Licensed Facilities") in
material compliance with the terms of the Permits issued by the FCC to the
Company and its Subsidiaries for the operation of the Licensed Facilities (the
"FCC Licenses"), and the Communications Act, except for possible non-compliance
which could not reasonably be expected to have a Material Adverse Effect on the
Company, impair the ability of the Company to perform its obligations under
this Agreement in any material respect or delay in any material respect or
prevent the consummation of the transactions contemplated by this Agreement.
The Company and its Subsidiaries have filed or made all applications, reports
and other disclosures required by the FCC to be filed or made with respect to
the Licensed Facilities and have paid all FCC regulatory fees with respect
thereto except for possible filings or disclosures that if not so filed or
disclosed could not reasonably be expected to have a Material Adverse Effect on
the Company, impair the ability of the Company to perform its obligations under
this Agreement in any material respect or delay in any material respect or
prevent the consummation of the transactions contemplated by this Agreement.
The Company and each of its Subsidiaries are the authorized legal holders of
all FCC Licenses necessary or used in the operation of the businesses of the
Licensed Facilities as presently operated except where the absence of such FCC
Licenses could not reasonably be expected to have a Material Adverse Effect on
the Company. All such FCC Licenses are validly held and are in full force and
effect, unimpaired by any act or omission of the Company, each of its
Subsidiaries or their respective officers, employees or agents. Except as
disclosed in Section 3.01(q) of the Company Disclosure Schedule, as of the date
hereof, no application, action or proceeding is pending for the renewal or
major modification of any of the FCC Licenses and, to the Company's knowledge,
there is not now before the FCC any material investigation, proceeding, notice
of violation, order of forfeiture or complaint against the Company or any of
its Subsidiaries relating to any of the Licensed Facilities that, if adversely
decided, would have a Material Adverse Effect on the Company, impair the
ability of the Company to perform its obligations under this Agreement in any
material respect or delay in any material respect or prevent the consummation
of the transactions contemplated by this Agreement (and the Company is not
aware of any basis that would cause the FCC not to renew any of the FCC
Licenses that are renewable). Except as disclosed in Section 3.01(q) of the
Company Disclosure Schedule, there is not now pending and, to the Company's
knowledge, there is not threatened, any action by or before the FCC to revoke,
suspend, cancel, rescind or modify in any material respect any of the FCC
Licenses that, if adversely decided, would have a Material Adverse Effect on
the Company.
(r) Environmental Matters. Except as disclosed in Section 3.01(r) of
the Company Disclosure Schedule, to the knowledge of the Company:
(i) the real property and facilities owned by the Company or any
of its Subsidiaries and the operations of the Company or any of its
Subsidiaries thereon comply in all material respects with all Environmental
Laws;
(ii) no judicial proceedings are pending or threatened against the
Company or any of its Subsidiaries alleging the violation of any Environmental
Laws, and there are no
-21-
administrative proceedings pending or threatened against the Company or any of
its Subsidiaries alleging the material violation of any Environmental Laws and
no written notice from any Governmental Entity or any private or public Person
has been received by the Company or any of its Subsidiaries claiming any
material violation of any Environmental Laws in connection with any real
property or facility owned by the Company or any of its Subsidiaries, or
requiring any material remediation, clean-up, modification, repairs, work,
construction, alterations, or installations on or in connection with any real
property or facility owned, operated or leased by the Company or any of its
Subsidiaries that are necessary to comply with any Environmental Laws and that
have not been complied with or otherwise resolved to the satisfaction of the
party giving such notice;
(iii) all material Permits required to be obtained or filed by the
Company or any of its Subsidiaries under any Environmental Laws in connection
with the Company's or any of its Subsidiaries' operations, including those
activities relating to the generation, use, storage, treatment, disposal,
release, or remediation of Hazardous Substances (as such term is defined in
Section 3.01(r)(iv) hereof), have been duly obtained or filed, and the Company
and each of its Subsidiaries are in compliance in all material respects with
the terms and conditions of all such Permits;
(iv) all Hazardous Substances used or generated by the Company or
any of its Subsidiaries on, in, or under any of the Company's or any of its
Subsidiaries owned, operated, or leased real property or facilities are and
have at all times been generated, stored, used, treated, disposed of, and
released by such Persons or on their behalf in such manner as not to result in
any material Environmental Costs or Liabilities. "Hazardous Substances" means
(a) any hazardous materials, hazardous wastes, hazardous substances, toxic
wastes, and toxic substances as those or similar terms are defined under any
Environmental Laws; (b) any asbestos or any material which contains any
hydrated mineral silicate, including chrysolite, amosite, crocidolite,
tremolite, anthophylite and/or actinolite, whether friable or non-friable; (c)
PCBs, or PCB-containing materials, or fluids; (d) radon; (e) any other
hazardous, radioactive, toxic or noxious substance, material, pollutant,
contaminant, constituent, or solid, liquid or gaseous waste regulated under any
Environmental Law; (f) any petroleum, petroleum hydrocarbons, petroleum
products, crude oil and any fractions or derivatives thereof, any oil or gas
exploration or production waste, and any natural gas, synthetic gas and any
mixtures thereof; and (g) any substance that, whether by its nature or its use,
is subject to regulation under any Environmental Laws or with respect to which
any Environmental Laws or Governmental Entity requires environmental
investigation, monitoring or remediation. "Environmental Costs or Liabilities"
means any material losses, liabilities, obligations, damages, fines, penalties,
judgments, settlements, actions, claims, costs and expenses (including, without
limitation, reasonable fees, disbursements and expenses of legal counsel,
experts, engineers and consultants, and the reasonable costs of investigation
or feasibility studies and performance of remedial or removal actions and
cleanup activities) in connection with (A) any violation of any Environmental
Laws, (B) order of, or contract of the Company or any of its Subsidiaries with,
any Governmental Entity or any private or public Persons arising out of or
resulting from the treatment, storage, disposal or release by the Company or
any of its Subsidiaries of any Hazardous Substances in material violation of
any Environmental Law or (C) a claim by any private or public Person arising
-22-
out of any material exposure of any Person or property to Hazardous
Substances in material violation of any Environmental Law;
(v) there are not now, nor have there been in the past, on, in or
under any property or facilities when owned by the Company or any of its
Subsidiaries or when owned, leased or operated by any of their predecessors,
any Hazardous Substances that are in a condition or location that materially
violates any Environmental Law or that has required or would require any
material remediation under any Environmental Laws or give rise to a claim for
damages or compensation by any affected Person or to any material Environmental
Costs or Liabilities and that have not been cured, complied with, remediated,
or resolved to the satisfaction of such affected Person or paid or resolved in
all material respects; and
(vi) neither the Company nor any of its Subsidiaries has received
any written notification from any source advising the Company or any of its
Subsidiaries that: (a) it is a potentially responsible party under CERCLA or
any other Environmental Laws; (b) any real property or facility currently or
previously owned, operated, or leased by it is identified or proposed for
listing as a federal National Priorities List ("NPL") (or state-equivalent)
site or a Comprehensive Environmental Response, Compensation and Liability
Information System ("CERCLIS") list (or state-equivalent) site; or (c) any
facility to which it has ever transported or otherwise arranged for the
disposal of Hazardous Substances is identified or proposed for listing as an
NPL (or state-equivalent) site or CERCLIS (or state-equivalent) site.
(s) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference into the
Proxy Statement will, at the date the Proxy Statement is first mailed to the
Company's stockholders or at the time of the Stockholder Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading.
(t) Board Recommendation. As of the date hereof, each of the Board of
Directors of the Company and the Independent Committee, at a meeting duly
called and held, have each unanimously (i) determined that this Agreement and
the transactions contemplated hereby are fair to and in the best interests of
the holders of the Class A Common Stock and have approved the same, (ii)
resolved to recommend that the Company's stockholders approve this Agreement
and the transactions contemplated herein and (iii) approved and recommended for
adoption to the Company's stockholders the Amendments.
(u) Property.
(i) Section 3.01(u) of the Company Disclosure Schedule sets forth
all of the real property owned in fee by the Company and its Subsidiaries that
are material to the conduct of business of the Company and its Subsidiaries,
taken as a whole. Each of the Company and its
-23-
Subsidiaries owns fee title to each parcel of real property owned by it free
and clear of all Liens, except for Permitted Liens (as defined in this Section
3.01(u)).
(ii) With respect to the tangible properties and assets of the
Company and its Subsidiaries (excluding real property) that are material to the
conduct of the broadcast operations of the Company and its Subsidiaries, the
Company and its Subsidiaries have good title to, or hold pursuant to valid and
enforceable leases, all such properties and assets, with only such exceptions
as, individually or in the aggregate, would not have a Material Adverse Effect
on the Company and subject to the Permitted Liens. All of the assets of the
Company and its Subsidiaries have been maintained and repaired for their
continued operation and are in good operating condition, reasonable wear and
tear excepted, and usable in the ordinary course of business, except where the
failure to be in such repair or condition or so usable would not individually
or in the aggregate have a Material Adverse Effect on the Company.
(iii) Section 3.01(u) of the Company Disclosure Schedule sets
forth each lease, sublease, license, sublicense or other agreement
(collectively, the "Property Leases") under which the Company or any of its
Subsidiaries uses or occupies or has the right to use or occupy, now or in the
future, any real property or personal property material to the conduct of the
businesses of the Company and its Subsidiaries, taken as a whole. Except to the
extent that (x) it would not have a Material Adverse Effect on the Company, or
(y) the term of such Property Lease has expired or been terminated and the
Company or its Subsidiaries continues to use or occupy any of the subject
property on a period to period basis (i.e., "month to month"), each Property
Lease is valid, binding and in full force and effect, all rent and other sums
and charges which are due and payable by the Company and its Subsidiaries as
tenants thereunder are current except as set forth in Section 3.01(u) of the
Company Disclosure Schedule, and neither the Company nor any of its
Subsidiaries has received actual notice that any party thereto is in default in
any material respect under any lease, sublease, license, sublicense or use or
occupancy agreement listed in Section 3.01(u) of the Company Disclosure
Schedule. Each of the Company and its Subsidiaries has a valid leasehold
interest (including subleasehold and subleasehold estates) and/or right of use
under a license or sublicense agreement or other possessory rights in each
location used or occupied for broadcast purposes (whether office, studio,
tower, transmitter building and/or antenna) leased, subleased, subsubleased,
licensed, sublicensed or used by it free and clear of all Liens, except for
Permitted Liens.
(iv) As used in this Agreement, "Permitted Liens" shall mean: (i)
statutory liens securing payments not yet delinquent or the validity of which
are being contested in good faith by appropriate actions, (ii) purchase money
liens arising in the ordinary course, (iii) liens for Taxes and special
assessments (e.g., for municipal improvements) not yet due and payable and/or
delinquent, (iv) liens reflected or reserved against in the unaudited balance
sheet of the Company dated as of June 30, 1997 (which have not been
discharged), (v) liens which in the aggregate do not materially detract from
the value for use for broadcasting purposes or materially impair the present
and continued use of the properties or assets subject thereto in the usual and
normal conduct of the radio broadcast business of the Company, (vi) liens on
leases, subleases, sub-subleases, easements, licenses, rights of use, rights to
access and rights of way arising from the provisions of such
-24-
agreements or benefitting or created by any superior estate, right or interest
which is prior in right or prior in lien to that of the subject lease,
sublease, sub-sublease, easement, license, right of use, right to access or
right of way, (vii) any liens set forth in the title policies, endorsements,
title commitments, title certificates and title reports relating to the
Company's interests in real property, copies of which have been provided to or
made available for review by Parent and Subsidiary, (viii) any leases,
subleases, occupancy agreements or licenses of the Company's real property,
(ix) the lien of any and all security agreements, documents, mortgages and
deeds of trust held by, or for the benefit of, (A) The Bank of New York,
individually and as agent, and its co-lenders, principals and/or participants
and their respective successors and assigns pursuant to the Third Amended and
Restated Credit Agreement dated as of June 23, 1997 among, inter alia, the
Company and The Bank of New York, as amended from time to time (the "Credit
Agreement") and (B) Xxx Xxxxx (or any Affiliate of his) affecting the WMXB
tower site in the Richmond, Virginia market as more fully described in Section
3.01(u) of the Company Disclosure Schedule, (x) any state of facts that an
accurate survey or personal inspection of the Company's real property (whether
owned, leased or licensed) would show, provided same does not material
adversely affect the use thereof for their present broadcasting purposes, (xi)
encroachments of xxxxxx, areas, cellar steps or doors, trim, copings, retaining
walls, bay windows, balconies, sidewalk elevators, fences, fire escapes,
cornices, foundations, footings and similar projections, if any, on, over or
under any of the Company's real property (whether owned, leased or licensed) or
the streets or sidewalks abutting any of such real property, and the rights of
governmental authorities to require the removal of any such projections and
variations between record lines of such real property and retaining walls and
the like, if any, (xii) any easements or rights of use, if any, created in
favor of any public utility or municipal department or agency for electricity,
steam, gas, telephone, cable television, water, sewer or other services in any
street or avenue abutting the Company's real property (whether owned, leased or
licensed), and the right, if any, to use and maintain wires, cables, terminal
boxes, lines, service connections, poles, mains and facilities servicing any of
such real property or in, on, over or across any of such real property, (xiii)
covenants, easements, restrictions, agreements, consents and other instruments,
now of record, provided same do not materially adversely interfere with the use
of the Company's real property (whether owned, leased or licensed) for their
present broadcast purposes, (xiv) variations, if any, between tax lot lines and
property lines, (xv) deviations, if any, of fences or shrubs from property
lines, (xvi) any other declaration or instrument affecting any of the Company's
real property (whether owned, leased or licensed) necessary or appropriate to
comply with any law, ordinance, regulation, zoning resolution or requirement of
applicable governmental authorities or any other public authority, applicable
to the maintenance, demolition, construction, alteration, repair or restoration
of the improvements at the Company's real property (whether owned, leased or
licensed), which does not materially adversely affect the use of thereof for
their present broadcast purposes, (xvii) the provisions of the applicable
zoning resolution and other regulations, resolutions and ordinances and any
amendments thereto now or hereafter adopted, (xviii) Liens described in the
Company SEC Documents, and (xix) any other Liens set forth in Section 3.01(u)
of the Company Disclosure Schedule. For the purposes hereof "Company's real
property" and "Company's interests in real property" shall include the real
property and interests therein owned or held respectively by the Company and/or
its Subsidiaries.
-25-
(v) Related Party Transactions. Except as set forth on Section
3.01(v) of the Company Disclosure Schedule, as contemplated herein or as
disclosed in the Company Filed SEC Documents, no director, officer, Affiliate
or "associate" (as such term is defined in Rule 12b-2 under the Exchange Act)
of the Company or any of its Subsidiaries is currently a party to any
transaction which would be required to be disclosed under Item 404 of
Regulation S-K of the Securities Act.
SECTION 3.02. Representations and Warranties of Parent and Sub. Parent
and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and Sub
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being conducted
or currently proposed to be conducted. Each of Parent and Sub is duly qualified
or licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed or to be in good
standing individually or in the aggregate would not have a Material Adverse
Effect on Parent or materially impair or delay the consummation of the
transactions contemplated by this Agreement. Parent has delivered to the
Company prior to the execution of this Agreement complete and correct copies of
its certificate of incorporation and by-laws and the certificate of
incorporation and by-laws of Sub, in each case as amended to the date hereof.
(b) Authority; Non-Contravention. Parent and Sub have all requisite
corporate power and authority to execute and deliver the Transaction Documents
and to consummate the transactions contemplated by the Transaction Documents.
The execution and delivery of the Transaction Documents by Parent and Sub and
the consummation by Parent and Sub of the transactions contemplated by the
Transaction Documents have been unanimously approved by the Board of Directors
of Parent and Sub and duly authorized by all necessary corporate action on the
part of Parent and Sub, and no other corporate proceedings on the part of
Parent and Sub are necessary to authorize the Transaction Documents or to
consummate such transactions. No vote of Parent stockholders is required to
approve the Transaction Documents or the transactions contemplated hereby. Each
of the Transaction Documents has been duly executed and delivered by Parent and
Sub and, assuming due authorization, execution and delivery of the Transaction
Documents by the Company and the other parties thereto, constitutes a valid and
binding obligation of Parent and Sub, enforceable against Parent and Sub in
accordance with its terms.
The execution and delivery of the Transaction Documents do not, and
the consummation of the transactions contemplated by the Transaction Documents
and compliance with the provisions of the Transaction Documents by Parent or
Sub, as the case may be, will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of Parent, Sub or any of Parent's
other Subsidiaries under, (i) the articles or certificate of incorporation
-26-
or by-laws of Parent and Sub, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent, Sub or such other Subsidiary or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Parent, Sub or such other Subsidiary or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, Liens, judgments, orders, decrees, statutes,
laws, ordinances, rules or regulations that individually or in the aggregate
would not (x) have a Material Adverse Effect on Parent, (y) impair the ability
of Parent and Sub to perform their respective obligations under the Transaction
Documents in any material respect or (z) delay in any material respect or
prevent the consummation of any of the transactions contemplated by the
Transaction Documents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required
by or with respect to Parent or Sub in connection with the execution and
delivery of the Transaction Documents or the consummation by Parent or Sub, as
the case may be, of any of the transactions contemplated by the Transaction
Documents, except for (1) the filing of a pre-Merger notification and report
form by Parent under the HSR Act; (2) the filing of the Certificate of Merger
with the Delaware Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business; (3) such filings with and approvals of the FCC as may be required
under the Communications Act, including filings and approvals in connection
with the transfer of control of the FCC Licenses; and (4) such consents,
approvals, orders or authorizations the failure of which to be made or obtained
would not reasonably be expected to have a Material Adverse Effect on Parent,
impair the ability of Parent to perform its obligations in any material respect
or delay in any material respect or prevent the consummation of the
transactions contemplated by this Agreement.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Proxy Statement will, at the date the Proxy Statement is first
mailed to the Company's stockholders or at the time of the Stockholders
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading.
(d) Financing. Parent has available, or at the Closing will have
available, sufficient funds (through existing credit arrangements or otherwise)
to enable it to consummate the transactions contemplated by the Transaction
Documents on their respective terms and conditions. Parent's and Sub's
obligations hereunder are not subject to any conditions regarding their ability
to obtain financing for the consummation of the transactions contemplated by
the Transaction Documents. Parent and Sub are each able to lawfully certify in
the FCC Applications (as defined in Section 5.02) that it is financially
qualified to consummate the transactions contemplated hereby.
(e) Litigation. There is no suit, action, proceeding or
indemnification claim (including any proceeding by or before the FCC but
excluding proceedings of general applicability to the radio industry) pending
or, to the knowledge of Parent, threatened against or affecting Parent
-27-
or any of its Subsidiaries that individually or in the aggregate could
reasonably be expected to (i) impair the ability of Parent or Sub to perform
its obligations under the Transaction Documents in any material respect or (ii)
delay in any material respect or prevent the consummation of any of the
transactions contemplated by the Transaction Documents, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Parent or any of its Subsidiaries having, or
which could reasonably be expected to have, any effect referred to in clause
(i) or (ii) above, except for any suit, action or proceeding asserted after the
date hereof by any stockholders of the Company in connection with any of the
transactions contemplated by this Agreement.
(f) Surviving Corporation After the Merger. Assuming the
representations and warranties of the Company contained in this Agreement are
true and accurate in all material respects immediately prior to the Effective
Time, and assuming that immediately prior to the Effective Time neither the
Company nor any member of the Delsener/Xxxxxx Group has failed to comply with a
covenant under this Agreement or any of the Spin Off Documents, as applicable,
which failure resulted, or could reasonably be expected to result, in a
material change in the Company's assets and liabilities, the Surviving
Corporation will not, at and immediately after the Effective Time, and after
giving effect to the Merger and the other transactions contemplated in
connection therewith (and any changes in the Surviving Corporation's assets and
liabilities as a result thereof) (i) be insolvent or rendered insolvent (either
because its financial condition is such that the sum of its debts is greater
than the value of its assets at fair valuation or because the present fair
saleable value of its assets will be less than the amount required to pay its
probable liabilities on its debts as they mature); and (ii) receive less than a
reasonably equivalent value in exchange for such transfer or obligation and was
not engaged in or was not about to be engaged in a business or transaction for
which the remaining assets of the Company constituted an unreasonably small
capital and did not intend to incur, or believe or reasonably should have
believed that the Company would incur, debts beyond its ability to pay same as
they become due.
(g) Net Worth of Surviving Corporation. Assuming that immediately
prior to the Effective Time neither the Company nor any member of the
Delsener/Xxxxxx Group has failed to comply with a covenant under this Agreement
or any Spin Off Documents, as applicable, which failure resulted, or could
reasonably be expected to result in a material change in the Company's assets
and liabilities, the Surviving Corporation will have a Consolidated Net Worth
immediately following the Merger and a Debt to Cash Flow Ratio at the time of
the Merger sufficient to comply with both Section 5.01 of the Indenture
Relating to the 2006 Notes (the "Indenture") and Section 8(c) of the
Certificate of Designations, Preferences and Relative, Participating, Optional
and Other Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions Thereof Relating to the Series E Preferred Stock (the "Series E
Certificate"). Any terms used in this paragraph but not otherwise defined in
this Agreement shall have the meanings given them in either the Indenture or
the Series E Certificate, as applicable.
-28-
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business.
(a) Conduct of Business by the Company. During the period from the
date of this Agreement to the Effective Time, except as contemplated by this
Agreement and the transactions contemplated hereby, the Company shall, and
shall cause its Subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and in compliance in all material respects with all
applicable laws and regulations (including the Communications Act). Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, except as contemplated by this Agreement
and the transactions contemplated hereby, the Company shall not, and shall not
permit any of its Subsidiaries to, without the consent of Parent:
(i) (A) except as set forth in Section 4.01(a)(i) of the Company
Disclosure Schedule or as provided in Sections 4.01(a)(xviii) and 5.07,
declare, set aside or pay any dividends on, or make any other distributions in
respect of, any of its capital stock, other than dividends and distributions by
a direct or indirect wholly owned Subsidiary of the Company to its parent and
regular cash dividends on shares of Preferred Stock, (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (C) except with respect to the mandatory redemption provisions
of the Series B Preferred Stock and the Series C Preferred Stock, purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
of its Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(ii) except as set forth in Section 4.01(a)(ii) of the Company
Disclosure Schedule, issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities other than (A) the issuance
of Class A Common Stock pursuant to the Asset Purchase and Sales Agreement
dated June 1997, among Sunshine Concerts, L.L.C., the Company, Sunshine
Promotions, Inc. and the stockholders of Sunshine Promotions, Inc. (the
"Sunshine Agreement"), (B) the issuance of Class A Common Stock upon the
exercise of Employee Stock Options outstanding on the date of this Agreement
and in accordance with their present terms, (C) the issuance of Class A Common
Stock upon conversion of the Class B Common Stock, the Series C Preferred Stock
or the Series D Preferred Stock, in each case in accordance with their present
terms, (D) the issuance of Class A Common Stock upon the exercise of warrants
or options of the Company outstanding on the date of this Agreement or upon the
exercise of the Unit Purchase Option Warrants, in each case in accordance with
their present terms, (E) the issuance of Class A Common Stock and Unit Purchase
Option Warrants upon exercise of the Unit Purchase Options and (F) the issuance
of Class A Common Stock and options to
-29-
purchase Class A Common Stock not to exceed 150,000 shares of Common Stock on a
fully-diluted basis;
(iii) amend its certificate of incorporation, by-laws or other
comparable organizational documents;
(iv) except and to the extent as set forth in Section 4.01(a)(iv)
and (v) of the Company Disclosure Schedule, acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, (A) any business or any corporation, limited
liability company, partnership, joint venture, association or other business
organization or division thereof, (B) any assets that individually or in the
aggregate are material to the Company and its Subsidiaries taken as a whole or
(C) any broadcast radio stations;
(v) except and to the extent as set forth in Section 4.01(a)(iv)
and (v) of the Company Disclosure Schedule, sell, lease, license, mortgage or
otherwise encumber or subject to any Lien or otherwise dispose of (A) any of
its properties or assets, other than in the ordinary course of business
consistent with past practice, that are material to the Company and its
Subsidiaries taken as a whole or (B) any broadcast radio stations;
(vi) except as set forth in Section 4.01(a)(vi) of the Company
Disclosure Schedule, except to finance capital expenditures permitted by clause
(vii) below or as contemplated by Section 5.07 and except for borrowings for
working capital purposes not in excess of $25,000,000 at any one time
outstanding incurred in the ordinary course of business consistent with past
practice and except for intercompany Indebtedness between the Company and any
of its Subsidiaries or between such Subsidiaries, (A) incur or guarantee any
Indebtedness, or (B) make any loans, advances or capital contributions to, or
investments in, any other Person, other than to the Company or any direct or
indirect wholly owned Subsidiary of the Company or to officers and employees of
the Company or any of its Subsidiaries for travel, business or relocation
expenses in the ordinary course of business;
(vii) except as set forth under the caption "Committed Projects"
in Section 4.01(a)(vii) of the Company Disclosure Schedule or as permitted by
Section 5.07, make or agree to make any new capital expenditures which in the
aggregate are in excess of $500,000; provided, however, that with the consent
of Parent, the Company may make additional capital expenditures (which consent
shall not be unreasonably withheld with respect to those capital expenditures
set forth under the caption "Proposed Projects" in Section 4.01(a)(vii) of the
Company Disclosure Schedule);
(viii) make any tax election that could reasonably be expected to
have a Material Adverse Effect on the Company or settle or compromise any
material income tax liability;
(ix) except as set forth in Section 4.01(a)(ix) of the Company
Disclosure Schedule or as required by law, and except in the ordinary course of
business or as would not
-30-
reasonably be expected to have a Material Adverse Effect on the Company,
modify, amend or terminate any material contract or agreement to which the
Company or any Subsidiary is a party or waive, release or assign any material
rights or claims thereunder;
(x) make any material change to its accounting methods, principles
or practices, except as may be required by generally accepted accounting
principles;
(xi) fail to act in the ordinary course of business consistent
with past practices of the Company exercising commercially reasonable care to
(A) preserve substantially intact the Company's and each of its Subsidiaries'
present business organization, (B) keep available the services of any employee
with an employment contract with the Company or any of its Subsidiaries, and
(C) preserve its present relationships with customers, suppliers and others
having business dealings with them;
(xii) fail to use commercially reasonable efforts to maintain the
material assets of the Company and each of its Subsidiaries in their current
physical condition, except for ordinary wear and tear and damage, provided that
nothing contained herein shall be deemed to require the Company or its
Subsidiaries to undertake or complete any capital improvements or replacements;
(xiii) merge or consolidate with or into any other legal entity or
dissolve or liquidate any of its material Subsidiaries;
(xiv) except as set forth in Section 4.01(a)(xiv) of the Company
Disclosure Schedule and as required by the terms and provisions of written
contracts between the Company or any of its Subsidiaries and an employee
thereof as in existence on the date of this Agreement or except in connection
with the extension of any collective bargaining agreements, (A) adopt or amend
any Benefit Plan other than in the ordinary course of business consistent with
past practice or as required by law, or (B) materially increase in any manner
the aggregate compensation or fringe benefits (including, without limitation,
commissions) of any officer, director, or employee or other station and
broadcast personnel of the Company or any of its Subsidiaries (whether
employees or independent contractors) other than as required by law;
(xv) except as set forth in Section 4.01(a)(xv) of the Company
Disclosure Schedule, pay, discharge, or satisfy any material (on a consolidated
basis for the Company and its Subsidiaries taken as a whole) claims,
liabilities, or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course of business
consistent with past practice, or fail to pay or otherwise satisfy (except if
being contested in good faith) any material (on a consolidated basis for the
Company and its Subsidiaries taken as a whole) accounts payable, liabilities,
or obligations when due and payable;
(xvi) except as set forth in Section 4.01(a)(xvi) of the Company
Disclosure Schedule, enter into any agreement with any Person other than Parent
or any of the Company's
-31-
Subsidiaries with respect to any local marketing agreement, time brokerage
agreement, joint sales agreement, or any other similar agreement;
(xvii) engage in any transactions with any of its Affiliates
(other than among the Company and its Subsidiaries and among such Subsidiaries)
other than (A) transactions disclosed in Section 4.01(a)(xvii) of the Company
Disclosure Schedule, or (B) transactions that do not provide for any ongoing
obligations on the part of the Company after the Closing, would not reasonably
be expected to have a Material Adverse Effect on the Company, would not impair
the ability of the Company to perform its obligations under the Transaction
Documents in any material respect and would not delay in any material respect
or prevent the consummation of the transactions contemplated by the Transaction
Documents;
(xviii) fail to declare and pay in cash on each normal record date
and payment date all accrued and unpaid dividends on each series of outstanding
Preferred Stock;
(xix) take or fail to take any action that would result in the
Series C Preferred Stock becoming convertible into Class A Common Stock; or
(xx) authorize, or commit or agree to take, any of the foregoing
actions.
Notwithstanding anything herein to the contrary, the Company may engage in any
of the transactions contemplated in Section 5.07.
(b) Conduct of Business by Parent. During the period from the date of
this Agreement to the Effective Time, unless the Company shall otherwise agree
in writing or except as otherwise required by this Agreement, Parent shall, and
shall cause its Subsidiaries to, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted except where the failure to so act would not adversely
affect Parent's ability to perform its obligations hereunder.
(c) Other Actions. The Company and Parent shall not, and shall not
permit any of their respective Subsidiaries to, take any action that would, or
that could reasonably be expected to, result in (i) any of the representations
and warranties of such party set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (iii) any
of the conditions to the Merger set forth in Article VI not being satisfied. In
addition, the Company further covenants that from and after the date hereof
until the Effective Time, without the prior written consent of Parent, the
Company shall not, except as otherwise set forth in Section 4.01(c) of the
Company Disclosure Schedule, take any action that could reasonably be expected
to impair or delay in any material respect obtaining the FCC Consent (as
defined in Section 6.01(b)) or complying with or satisfying the terms thereof
or result in imposition of materially adverse conditions on the FCC Consent. On
and prior to the Effective Time, Parent and Sub shall remain qualified under
the Communications Act and otherwise to consummate the transactions
contemplated herein.
-32-
(d) Advice of Changes. The Company and Parent shall promptly advise
the other party orally and in writing of (i) any representation or warranty
made by the advising party contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by the advising party to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by the advising party under this
Agreement or (iii) any change or event having, or which, insofar as can
reasonably be foreseen, would have, a Material Adverse Effect on such party or
on the truth of its respective representations and warranties or the ability of
the conditions set forth in Article VI to be satisfied; provided, however, that
no such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(e) Notification of Certain Matters. If Parent (or its Affiliates) or
the Company receives an administrative or other order or notification relating
to any violation or claimed violation of the rules and regulations of the FCC,
or of any Governmental Entity, that could affect Parent's, Sub's or the
Company's ability to consummate the transactions contemplated hereby, or should
Parent (or its Affiliates) or the Company become aware of the fact (including
any change in law or regulations (or any interpretation thereof by the FCC))
relating to the qualifications of Parent (and its controlling Persons) that
reasonably could be expected to cause the FCC to withhold its consent to the
transfer of control of the FCC Licenses, Parent or the Company, as the case may
be, shall promptly notify the other party thereof and the Company shall use all
reasonable efforts to take such steps as may be necessary, to remove any
impediment of the Company to consummate the transactions contemplated by this
Agreement. In addition, Parent or the Company, as the case may be, shall give
to the other party prompt written notice of (i) the occurrence, or failure to
occur, of any event of which it becomes aware that has caused or that would be
likely to cause any representation or warranty of Parent and Sub or the
Company, as the case may be, contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date, and (ii) the
failure of Parent and Sub or the Company, as the case may be, or any officer,
director, employee or agent thereof, to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by it hereunder. No such notification shall affect the representations or
warranties of the parties or the conditions to their respective obligations
hereunder.
SECTION 4.02. No Solicitation.
(a) From and after the date hereof until the termination of this
Agreement, neither the Company nor any of its Subsidiaries, nor any of their
respective officers, directors, representatives, agents or Affiliates
(including, without limitation, any investment banker, attorney or accountant
retained by the Company or any of its Subsidiaries) (collectively,
"Representatives") will, and the Company will cause the employees of the
Company and its Subsidiaries not to, directly or indirectly, (i) solicit,
initiate or encourage the submission of any Takeover Proposal (as defined in
Section 8.03(l)), (ii) enter into any agreement with respect to any Takeover
Proposal or give any approval of the type referred to in Section 3.01(l) with
respect to any Takeover Proposal or (iii) participate in any discussions or
negotiations regarding, or furnish to any Person any information
-33-
with respect to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Takeover Proposal; provided, however, that if at any time prior to the
receipt of the Stockholder Approval, the Board of Directors of the Company
determines in good faith, based on the advice of outside counsel, that it is
necessary to do so in order to comply with its fiduciary duties to the
Company's stockholders under applicable law, the Company (and its
Representatives) may, in response to an unsolicited Takeover Proposal of the
sort referred to in clause (x) of Section 8.03(k) that involves consideration
to the Company's stockholders with a value that the Company's Board of
Directors reasonably believes, after receiving advice from the Company's
financial advisor, is superior to the consideration provided for in the Merger,
and subject to compliance with Section 4.02(c), (x) furnish information with
respect to the Company pursuant to a customary confidentiality agreement
(having terms substantially similar to those contained in the Confidentiality
Agreement (as defined in Section 5.01)) to any Person making such proposal and
(y) participate in negotiations regarding such proposal. The Company shall
immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any parties
conducted heretofore by the Company or any Representatives with respect to any
Takeover Proposal existing on the date hereof. Without limiting the foregoing,
it is understood that any violation of the restrictions set forth in the
preceding sentence by any Representative of the Company or any of its
Subsidiaries, whether or not such Person is purporting to act on behalf of the
Company or any of its Subsidiaries or otherwise, shall be deemed to be a breach
of this Section 4.02(a) by the Company.
(b) Neither the Board of Directors of the Company nor any committee
thereof (including without limitation the Independent Committee) shall (x)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent, the approval (including, without limitation, either the Board of
Directors' or the Independent Committee's resolution providing for such
approval) or recommendation by such Board of Directors or such committee of
this Agreement, the Merger or the Amendments or (y) approve or recommend, or
propose to approve or recommend, any Takeover Proposal, except in the case of
clause (x) or (y), in connection with a Superior Proposal (as defined in
Section 8.03(k)) and then only at or after the termination of this Agreement
pursuant to Section 7.01(c).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company promptly shall advise
Parent orally and in writing of any request for information or of any Takeover
Proposal or any inquiry with respect to or which could reasonably be expected
to lead to any Takeover Proposal, the identity of the Person making any such
request, Takeover Proposal or inquiry and all the terms and conditions thereof.
The Company will keep Parent fully informed of the status and details
(including amendments or proposed amendments) of any such request, Takeover
Proposal or inquiry.
(d) Nothing contained in this Section 4.02 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14d-9 or Rule 14e-2 promulgated under the Exchange Act; provided, however,
neither the Company nor its Board of Directors nor any committee thereof shall,
except as permitted by Section 4.02(b), withdraw or modify, or propose to
-34-
withdraw or modify, its approval or recommendation with respect to the Merger
(including, without limitation, either the Board of Directors' or the
Independent Committee's resolution providing for such approval) or approve or
recommend, or propose to approve or recommend, a Takeover Proposal.
SECTION 4.03. Stockholders Meeting. (a) The Company will, as soon as
practicable following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders Meeting") for
the purpose of obtaining the Stockholder Approval. Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant
to the first sentence of this Section 4.03 shall not be affected by the
commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal. The Company will, through its Board of
Directors and the Independent Committee, recommend to its stockholders the
approval and adoption of this Agreement, the Merger and the Amendments and such
recommendation and approval shall be set forth in the Proxy Statement, except
to the extent that the Board of Directors of the Company shall have withdrawn
or modified its approval or recommendation of this Agreement, the Merger or the
Amendments and terminated this Agreement in accordance with Section 7.01(c).
(b) The Company shall prepare and file a preliminary Proxy Statement
with the SEC within six weeks following the date of this Agreement and shall
use its commercially reasonable efforts to respond to any comments of the SEC
or its staff, and, to the extent permitted by law, to cause the Proxy Statement
to be mailed to the Company's stockholders as promptly as practicable after
responding to all such comments to the satisfaction of the SEC staff and in any
event at least twenty (20) business days prior to the Stockholders Meeting. The
Company shall notify Parent promptly of the receipt of any comments from the
SEC or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will
supply Parent with copies of all correspondences between the Company or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Merger. Prior to the filing of
the Proxy Statement or any amendment thereto with the SEC, the Company shall
provide the Parent and its legal counsel with a reasonable opportunity to
review and comment on such document. If at any time prior to the Stockholders
Meeting there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare and mail
to its stockholders such an amendment or supplement. The Company shall not mail
any Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects. Parent shall cooperate with and provide such information as
is reasonably requested by the Company in the preparation of the Proxy
Statement or any amendment or supplement thereto.
SECTION 4.04. Assistance. If Parent requests, the Company will
cooperate, and the Company will cause each of its Subsidiaries and will request
its accountants, at the sole cost and expense of Parent, to cooperate in all
reasonable respects in connection with any financing efforts of Parent or its
Affiliates (including providing reasonable assistance in the preparation of one
or more registration statements or other offering documents relating to debt
and/or equity financing)
-35-
and any other filings that may be made by Parent or its Affiliates with the
SEC, all at the sole expense of Parent and during normal business hours, upon
reasonable prior notice and in such manner as will not unreasonably interfere
with the conduct of the Company's or any of its Subsidiaries' businesses.
Subject to the foregoing, the Company shall, and shall cause each of its
Subsidiaries to, (i) furnish to its independent accountants (or, if requested
by Parent to Parent's independent public accountants), such customary
management representation letters as its accountants may reasonably require of
the Company as a condition to its execution of any required accountants'
consents necessary in connection with the delivery of any "comfort" letters
requested by financing sources of Parent or its Affiliates and (ii) furnish to
Parent all financial statements (audited and unaudited) and other information
in the possession of the Company or any of its Subsidiaries or their
representatives or agents as Parent shall reasonably determine is required in
connection with such financing.
SECTION 4.05. Releases. The Company shall (i) use its commercially
reasonable efforts to receive, prior to the Effective Time, an Option Release
Agreement in substantially the form attached hereto as Annex B (a "Release
Agreement") from each Person (other than the Persons named in Section 4.05 of
the Company Disclosure Schedule (the "Executive Group")) who is the holder of
any Options or SARs, (ii) obtain from each member of the Executive Group a
Release Agreement and (iii) use its commercially reasonable efforts to receive
prior to the Effective Time an agreement substantially similar to the Release
Agreement from each Person who is the holder of Unit Purchase Options.
SECTION 4.06. Termination of Certain Affiliate Transactions. The
Company will amend each of the agreements set forth on Section 4.06 of the
Company Disclosure Schedule so that immediately prior to the Effective Time it
will have no obligations thereunder except as set forth in Section 4.06 of the
Company Disclosure Schedule.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Access to Information; Confidentiality. Subject to the
Confidentiality Agreement (as defined below), each of the Company and Parent
shall, and shall cause each of its respective Subsidiaries to, afford to the
other party and to the officers, employees, accountants, counsel, financial
advisors, lenders and other representatives of such other party, reasonable
access during normal business hours during the period prior to the Effective
Time to all their respective properties, books, contracts, commitments,
personnel and records and, during such period, each of the Company and Parent
shall, and shall cause each of its respective Subsidiaries to, prepare or cause
to be prepared, or furnish promptly to the other party (a) a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of Federal or state securities laws
and (b) all other information concerning its business, properties and personnel
as such other party may reasonably request. Each of the Company and Parent will
hold, and will cause its respective officers, employees, accountants, counsel,
financial
-36-
advisors and other representatives and Affiliates to hold, any nonpublic
information in accordance with the terms of the Confidentiality Agreement dated
as of August 1, 1997, between Capstar Broadcasting Partners, Inc. and the
Company (the "Confidentiality Agreement").
SECTION 5.02. Reasonable Efforts.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by the
Transaction Documents, including (i) the obtaining of all necessary consents,
approvals or waivers from third parties ("Third Party Consents"), (ii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging any of the Transaction Documents or the
consummation of the transactions contemplated by the Transaction Documents
(such as in connection with the transfer of control of the FCC Licenses),
including seeking to have any stay or temporary restraining order entered by
any court or other Governmental Entity vacated or reversed and (iii) the
execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of, the
Transaction Documents. Except for making the filings contemplated in Section
5.02(b), notwithstanding anything to the contrary contained in this Agreement,
nothing in this Agreement shall obligate Parent or Sub to use reasonable
efforts to obtain approval of the FCC Applications or clearance under the HSR
Act and the grant of any waivers in connection therewith. However,
notwithstanding the preceding sentence, Parent shall obtain approval of the FCC
Applications and clearance under the HSR Act and the grant of any waivers in
connection therewith prior to the Termination Date unless the failure to obtain
such clearance, consents and waivers is primarily the result of Acts or
Changes. For purposes of this Agreement "Acts or Changes" shall mean (i) acts
or omissions on the part of the Company or any of its Subsidiaries in
conducting their respective operations and activities other than relating to
the number of licenses or amount of revenues in a particular market, (ii) a
breach by the Company of its obligations under this Agreement or (iii) a
statutory change or enactment made by Congress which (A) decreases the number
of radio licenses which an entity may own nationally or locally or (B)
adversely relates to the concentration of radio licenses which an entity may
own in a market, and as a result of the change or enactment referred to in
either clause (A) or (B) above, Parent's performance of its obligations under
this Agreement would result in a Material Adverse Effect on Parent and its
Attributable Entities, taken as a whole. For purposes of the preceding
sentence, "Attributable Entities" shall mean Parent and any entities whose
radio licenses would be attributable to Parent under applicable FCC rules or
regulations or under the HSR Act.
(b) In connection with and without limiting the foregoing, Parent and
the Company shall file the applications (the "FCC Applications") with the FCC
for the transfer of control of the FCC Licenses within 21 business days after
the date hereof but in no event prior to September 8, 1997. Additionally, as
soon as practicable after the date of this Agreement, but in no event more than
twenty-one (21) business days after the date of this Agreement, Parent and the
-37-
Company will file or will cause to be filed all notifications and documents in
connection with this Agreement required to be filed pursuant to the HSR Act,
and the rules and regulations promulgated under the HSR Act. Parent and the
Company will make or cause to be made all such other filings and submissions
under the HSR Act and regulations required to consummate the transactions
contemplated by this Agreement. Both Parent and the Company will request early
termination of the waiting period imposed by the HSR Act. Subject to the
Confidentiality Agreement, Parent and the Company will coordinate and cooperate
with one another in exchanging information and reasonable assistance as the
other may request in connection with notifications or other filings made under
the HSR Act. Parent and the Company shall keep the other party apprised of the
status of any inquiries made by the U.S. Department of Justice, Antitrust
Division, or the Federal Trade Commission (collectively, the "Federal Antitrust
Agencies"), with respect to the transactions contemplated by this Agreement.
Both Parent and the Company shall use their best efforts to cause a termination
of the waiting period imposed by the HSR Act without the entry by a court of
competent jurisdiction of an order enjoining the consummation of or the
transactions contemplated by this Agreement; provided that, Parent shall
consent to the divestiture of such properties as may be necessary to receive
approval by the Federal Antitrust Agencies without entry of such an injunction;
provided, however, that Parent and Sub (and their Affiliates) shall not be
required by this provision to divest any interest they may hold in any
television station. Parent shall pay all expenses and assume all obligations
with respect to such divestitures. As may be reasonably requested by Parent,
and subject to the receipt of confidentiality agreements reasonably acceptable
to the Company, the Company shall provide reasonable access to its business,
assets and operations, on a basis consistent with that described in Section
5.01, as may be necessary to cooperate with Parent in connection with its
efforts to effectuate such divestitures and the Company shall otherwise
reasonably cooperate with Parent by making any required governmental filing.
(c) In connection with and without limiting the foregoing, the Company
and its Board of Directors shall (i) take all action necessary to ensure that
no state takeover statute or similar statute or regulation is or becomes
applicable to the Merger, this Agreement, the Stockholder Agreement or any of
the other transactions contemplated by this Agreement or the Stockholder
Agreement and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Merger, this Agreement, the Stockholder
Agreement or any other transaction contemplated by this Agreement or the
Stockholder Agreement, take all action necessary to ensure that the Merger and
the other transactions contemplated by this Agreement and the Stockholder
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and the Stockholder Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement and the Stockholder Agreement.
SECTION 5.03. Benefit Plans. Parent shall take such action as may be
necessary so that on and after the Effective Time and for one year thereafter,
directors (who are employees of the Company or any of its Subsidiaries),
officers and employees of the Company and its Subsidiaries shall be provided
employee benefits, plans and programs (including but not limited to incentive
compensation, deferred compensation, pension, life insurance, medical (which
eligibility shall not be subject to any exclusions for any pre-existing
conditions if such individual has met the
-38-
participation requirements of such benefits, plans or programs of the Company
or its Subsidiaries), profit sharing (including 401(k), severance, salary
continuation and fringe benefits) which are no less favorable in the aggregate
than those generally available to similarly situated directors, officers and
employees of Capstar Broadcasting Corporation and its Subsidiaries. For
purposes of eligibility to participate and vesting in all benefits provided to
directors, officers and employees, the directors, officers and employees of the
Company and its Subsidiaries will be credited with their years of service with
the Company and its Subsidiaries and prior employers to the extent service with
the Company and its Subsidiaries and prior employers is taken into account
under plans of the Company and its Subsidiaries. Upon termination of any health
plan of the Company or any of its Subsidiaries, individuals who were directors,
officers or employees of the Company or its Subsidiaries at the Effective Time
shall if employed by the Company and its Subsidiaries become eligible to
participate in such health plans established by Parent. Amounts paid before the
Effective Time by directors, officers and employees of the Company and its
Subsidiaries under any health plans of the Company shall after the Effective
Time be taken into account in applying deductible and out-of-pocket limits
applicable under the health plans of Parent provided as of the Effective Time
to the same extent as if such amounts had been paid under such health plans of
Parent.
SECTION 5.04. Indemnification, Exculpation and Insurance.
(a) The certificate of incorporation and by-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in the certificate of incorporation and
by-laws of the Company, as in effect on the date hereof, which provisions shall
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would affect adversely the rights
thereunder of individuals who at any time prior to the Effective Time were
directors, officers or employees of the Company or any of its Subsidiaries,
unless such modification shall be required by law.
(b) From and after the Effective Time, Parent and the Surviving
Corporation shall indemnify, defend and hold harmless each Person who is now,
or has been at any time prior to the date of this Agreement or who becomes
prior to the Effective Time, an officer, director or employee of the Company or
any of its Subsidiaries (collectively, the "Indemnified Parties") against all
losses, reasonable expenses (including reasonable attorneys' fees), claims,
damages, liabilities or amounts that are paid in settlement of, or otherwise in
connection with, any threatened or actual claim, action, suit, proceeding or
investigation (a "Claim"), based in whole or in part on or arising in whole or
in part out of the fact that the Indemnified Party (or the Person controlled by
the Indemnified Party) is or was a director, officer or employee of the Company
or any of its Subsidiaries and pertaining to any matter existing or arising out
of actions or omissions occurring at or prior to the Effective Time (including,
without limitation, any Claim arising out of this Agreement or any of the
transactions contemplated hereby), whether asserted or claimed prior to, at or
after the Effective Time, in each case to the fullest extent permitted under
Delaware law, and shall pay any expenses, as incurred, in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
fullest extent permitted under Delaware law. Without limiting the foregoing, in
the event any such Claim is brought against any of the Indemnified Parties,
(i) such Indemnified Parties may retain
-39-
counsel (including local counsel) satisfactory to them and which shall be
reasonably satisfactory to Parent and the Surviving Corporation and they shall
pay all reasonable fees and expenses of such counsel for such Indemnified
Parties; and (ii) Parent and the Surviving Corporation shall use all reasonable
efforts to assist in the defense of any such Claim, provided that Parent and
the Surviving Corporation shall not be liable for any settlement effected
without their written consent, which consent, however, shall not be
unreasonably withheld. Notwithstanding the foregoing, nothing contained in this
Section 5.04 shall be deemed to grant any right to any Indemnified Party which
is not permitted to be granted to an officer, director or employee of Parent
under Delaware law, assuming for such purposes that Parent's certificate of
incorporation and bylaws provide for the maximum indemnification permitted by
law.
(c) Parent will cause to be maintained for a period of not less than
six years from the Effective Time the Company's current directors' and
officers' insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to the Effective Time ("D&O Insurance") for
all Persons who are directors and officers of the Company on the date of this
Agreement, so long as the annual premium therefor would not be in excess of
200% of the last annual premium therefor paid prior to the date of this
Agreement (the "Maximum Premium"); provided, however, that Parent may, in lieu
of maintaining such existing D&O Insurance as provided above, cause coverage to
be provided under any policy maintained for the benefit of Parent or any of its
Subsidiaries, so long as the terms thereof are no less advantageous to the
intended beneficiaries thereof than the existing D&O Insurance. If the existing
D&O Insurance expires, is terminated or canceled during such six-year period,
Parent will use all reasonable efforts to cause to be obtained as much D&O
Insurance as can be obtained for the remainder of such period for an annualized
premium not in excess of the Maximum Premium, on terms and conditions no less
advantageous to the covered Persons than the existing D&O Insurance. The
Company represents to Parent that the Maximum Premium is $450,000.
SECTION 5.05. Fees and Expenses; Deposit.
(a) Except as provided below in this Section 5.05 and Section 7.02,
and except for FCC filing fees in connection with the filing of the FCC
Applications and filing fees under the HSR Act in connection with the
transactions contemplated by this Agreement, 50% of which shall be paid by
Parent and 50% of which shall be paid by the Company, all fees and expenses
incurred in connection with the Merger, this Agreement, the Stockholder
Agreement and the transactions contemplated by this Agreement and the
Stockholder Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or shall cause to be paid, in same day
funds to Parent, or its designee, the following specified termination fee (the
"Termination Fee") upon demand if this Agreement is terminated as follows: (i)
if this Agreement is terminated pursuant to Section 7.01(b)(i), then a
Termination Fee of $25,000,000 shall be payable upon demand; (ii) if this
Agreement is terminated pursuant to Section 7.01(b)(v), then a Termination Fee
of $10,000,000 shall be payable upon demand; or (iii) if this Agreement is
terminated pursuant to either Section 7.01(c)
-40-
or 7.01(d) (including a conditional termination pursuant to the proviso
contained in Section 7.01(d)), then a Termination Fee of $50,000,000 shall be
payable contemporaneously with such termination.
(c) In the event that this Agreement is terminated pursuant to either
Section 7.01(b)(i) or 7.01(b)(v) and within one year of such termination
definitive documentation with respect to a Takeover Proposal has been entered
into or 50% or more of the outstanding Common Stock has been acquired pursuant
to a tender offer made as a Takeover Proposal, then the Company shall pay, or
shall cause to be paid, contemporaneously with such consummation, in same day
funds to Parent, or its designee, an additional amount of Termination Fee in an
amount equal to $25,000,000 in the case of termination under 7.01(b)(i) and
$40,000,000 in the case of a termination under Section 7.01(b)(v).
(d) In the event that this Agreement is terminated pursuant to Section
7.01(b)(i), 7.01(b)(v), 7.01(c) or 7.01(d), the Company shall pay upon demand,
or shall cause to be paid, in same day funds to Parent, or its designee, such
amount as may be required to reimburse Parent and its Affiliates (the
"Reimbursement Amount") for all reasonable out-of-pocket fees, costs and
expenses incurred by any of them in connection with their due diligence efforts
or the transactions contemplated hereby, including, without limitation, (A)
fees, costs and expenses of accountants, counsel, financial advisors and other
similar advisors, (B) fees paid to any Governmental Entity and (C) fees, costs
and expenses paid or payable to third parties under any financing commitments
or similar arrangements or in connection with financing transactions or
efforts, including, without limitation, any purchaser or underwriter's
discounts relating to the sale of the debt or equity financing or (except for
the principal amount payable in connection therewith, but including all accrued
interest payable in connection therewith) the making of any repurchase offer in
respect of such financing (collectively, "Expenses"); provided however, the
Reimbursement Amount shall not exceed (x) $2,500,000 in the case of a
termination under either Section 7.01(b)(i), 7.01(c) or 7.01(d) and (y)
$10,000,000 in the case of a termination under Section 7.01(b)(v).
(e) The Termination Fee and Reimbursement Amount shall be paid by the
Company without reservation of rights or protests and the Company upon making
such payment shall be deemed to have released and waived any and all rights
that it may have to recover such amounts.
(f) Concurrently with the execution of this Agreement, in order to
secure Parent's and Sub's performance under this Agreement and as security for
damages that may be payable by Parent or Sub to the Company hereunder, Parent
shall place into escrow pursuant to the Deposit Escrow Agreement in the form
attached as Annex C hereto (the "Escrow Agreement") an irrevocable letter of
credit (the "Letter of Credit") in the sum of $100,000,000 substantially in the
form attached as Annex D hereto. The Letter of Credit will provide that the
Company can draw the amount thereof after its release to the Company from the
Escrow Agreement.
(g) If this Agreement is terminated pursuant to (i) Section
7.01(b)(ii) and as of such date the conditions set forth in Sections 6.01(b)
and 6.01(c) have not been fulfilled other than
-41-
a nonfulfillment primarily due to Acts or Changes; (ii) Section 7.01(b)(iii)
and such order, injunction, decree, ruling or other action is not primarily due
to Acts or Changes, or (iii) Section 7.01(b)(iv) by the Company, then Parent
and Company shall promptly instruct the escrow agent under the Escrow Agreement
to release the Letter of Credit to the Company as liquidated damages. The
parties agree that the foregoing liquidated damages are reasonable considering
all the circumstances existing as of the date hereof and constitute the
parties' good faith estimate of the actual damages reasonably expected to
result from the termination of this Agreement as described in this Section
5.05(g). Except as contemplated by Section 5.05(i), the Company agrees that, to
the fullest extent permitted by law, the Company's right to payment of such
liquidated damages as provided in this Section 5.05(g) shall be its sole and
exclusive remedy if the Closing does not occur because of a termination of this
Agreement as described in this Section 5.05(g) or with respect to any damages
whatsoever that the Company may suffer or allege to suffer as a result of any
Claim or cause of action asserted by the Company relating to or arising from
breaches of the representations, warranties or covenants of Parent or Sub
contained in this Agreement and to be made or performed at or prior to the
Closing. If this Agreement is terminated either by Parent or the Company
pursuant to any provision of Section 7.01 other than a termination described in
clauses (i), (ii) or (iii) of this Section 5.05(g), then, Parent and the
Company shall instruct the escrow agent under the Escrow Agreement to release
the Letter of Credit to Parent.
(h) As a condition to the release of the Letter of Credit to the
Company under Section 5.05(g), the Company shall deliver to the Parent an
agreement which irrevocably and unconditionally releases, acquits, and forever
discharges Parent and Sub and their respective successors, assigns, officers,
directors, employees, agents, stockholders, Subsidiaries, Parent companies and
other Affiliates (corporate or otherwise) (the "Released Parties") of and from
any and all Released Claims, including, without limitation, all Released Claims
arising out of, based upon, resulting from or relating to the negotiation,
execution, performance, breach or otherwise related to or arising out of the
Transaction Documents or any agreement entered into in connection therewith or
related thereto. "Released Claims" as used herein shall mean any and all
charges, complaints, claims, causes of action, promises, agreements, rights to
payment, rights to any equitable remedy, rights to any equitable subordination,
demands, debts, liabilities, express or implied contracts, obligations of
payment or performance, rights of offset or recoupment, accounts, damages,
costs, losses or expenses (including attorneys' and other professional fees and
expenses) held by the Company or any of its Subsidiaries, whether known or
unknown, matured or unmatured, suspected or unsuspected, liquidated or
unliquidated, absolute or contingent, direct or derivative relating to the
transactions contemplated by the Transaction Documents, provided, however, that
Released Claims shall not include claims for unpaid expenses and interest
described in Section 5.05(i) relating to the release of the Escrowed Property
(as defined in the Escrow Agreement) or for any escrow expenses unpaid by
Parent and withheld by the escrow agent from the Escrowed Property pursuant to
the Escrow Agreement
(i) In the event that this Agreement is terminated and Parent and the
Company do not promptly agree on who is entitled to the Letter of Credit then,
upon a Final Determination (as defined in the Escrow Agreement) the
non-prevailing party shall pay to the prevailing party (x) the
-42-
amount of the reasonable fees and expenses actually incurred by the prevailing
party in connection with obtaining the Final Determination and (y) interest on
the face amount of the Letter of Credit at the annual rate of 10% commencing as
of the date of the termination or purported termination of this Agreement and
ending as of the date that the Escrowed Property has been released from escrow
to the prevailing party.
SECTION 5.06. Public Announcements. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before
issuing, and provide each other the opportunity to review, comment upon and
concur with, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall
not issue any such press release or make any such public statement prior to
such consultation, except as may be required by applicable law, court process
or by obligations pursuant to any listing agreement with any national
securities exchange or the National Association of Securities Dealers, Inc. The
parties agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement and the Stockholder Agreement shall
be in the form heretofore agreed to by the parties.
SECTION 5.07. Delsener/Xxxxxx Spin Off. Prior to the Closing, the
Company shall (a) contribute all of the capital stock of SFX Concerts, Inc.,
formerly known as Delsener/Xxxxxx Enterprises, Inc. ("Delsener/Xxxxxx"), that
the Company directly or indirectly owns to a newly formed Subsidiary of the
Company to be formed in Delaware ("Delsener/Xxxxxx Holdings"), and (b)
distribute pro rata to the holders of Common Stock (the "Spin Off"), in a
taxable transaction, all of the capital stock owned by the Company in
Delsener/Xxxxxx Holdings, with the holders of the Class A Common Stock and
Class B Common Stock receiving in the Spin Off class A common stock and class B
common stock, respectively, of Delsener/Xxxxxx Holdings having features similar
to such Class A Common Stock or Class B Common Stock; provided that,
notwithstanding the foregoing, simultaneously with the Spin Off, the Company
shall place that number of shares of the class A common stock of
Delsener/Xxxxxx Holdings in an escrow account with an escrow agent selected by
the Company and governed by an escrow agreement reasonably acceptable to the
Company and Parent for delivery to the holders of the IPO Warrants, Xxxx
Warrants and SCMC Warrants upon exercise of such Warrants that equals the
aggregate number of shares of common stock of Delsener/Xxxxxx Holdings that the
holders of such Warrants would have been entitled to receive as a result of
their ownership of the Class A Common Stock that they would have received if
they had exercised all of their IPO Warrants, Xxxx Warrants and SCMC Warrants
immediately prior to the Spin Off. As soon as practicable following the
execution of this Agreement, Parent and the Company shall in good faith
mutually agree on the definitive documentation necessary to effectuate the Spin
Off and document the contractual relationship between Delsener/Xxxxxx and the
Company (the "Spin Off Documentation"). The parties hereto agree that the Spin
Off Documentation shall be consistent with the following principles:
(a) Delsener/Xxxxxx Holdings shall indemnify, defend and hold the
Company and its Subsidiaries (other than Delsener/Xxxxxx Holdings and its
Subsidiaries, collectively the "Delsener/Xxxxxx Group") harmless from and
against any liabilities (other than income tax liabilities)
-43-
to which the Company or any of its Subsidiaries (other than the Delsener/Xxxxxx
Group) may be or become subject that relate to the assets, business,
operations, debts or liabilities of the Delsener/Xxxxxx Group including without
limitation, liabilities to be assumed by any member of the Delsener/Xxxxxx
Group as contemplated herein, whether arising prior to, concurrent with or
after the Spin Off or as a result of the failure to obtain all necessary third
party consents to the Spin Off.
(b) The Company shall indemnify, defend and hold the Delsener/Xxxxxx
Group harmless from and against any liabilities (other than income tax
liabilities) to which the Delsener/Xxxxxx Group may be or become subject that
relate to the assets, business, operations, debts or liabilities of the Company
or its Subsidiaries (other than the Delsener/Xxxxxx Group) whether arising
prior to, concurrent with or after the Spin Off.
(c) The Spin Off Documentation shall include an agreement that
addresses issues of the allocation of Tax liabilities and deconsolidation of
the Company and the Delsener/Xxxxxx Group which shall be consistent with the
following principles:
(i) Any tax sharing agreement between any of the Delsener/Xxxxxx
Group and any of the Company and its Subsidiaries shall be terminated as of the
effective date of the Spin Off (the "Spin Off Date") and will have no further
effect for any taxable year (whether the current year, a future year, or a past
year).
(ii) The Company shall include the income of the Delsener/Xxxxxx
Group (including any deferred income triggered into income by Reg. ss.1.1502-13
and Reg. ss.1.1502-14 and any excess loss accounts taken into income under Reg.
ss.1.1502-19) on the Company's consolidated federal income tax returns and
consolidated or combined state and local income taxes that are properly
includible thereon for all periods through the Spin Off Date and pay any income
taxes attributable to such income. Delsener/Xxxxxx Holdings shall reimburse the
Company for the federal, state and local income taxes payable by the Company
Tax Group attributable to such income, as determined on a separate company
basis, to the extent not included in the computation of the Working Capital,
provided that Delsener/Xxxxxx Holdings shall have no reimbursement obligation
if the Company has no income tax liability on a consolidated basis as a result
of a net operating loss. The Delsener/Xxxxxx Group will furnish tax information
to the Company for inclusion in the Company's federal consolidated income tax
return for the period which includes the Spin Off Date in accordance with
Delsener/Xxxxxx'x past custom and practice. The income of the Delsener/Xxxxxx
Group will be apportioned to the period up to and including the Spin Off Date
and the period after the Spin Off Date by Closing the books of the
Delsener/Xxxxxx Group as of the end of the Spin Off Date.
(iii) The Company shall control any audit or contest relating to
Taxes attributable to the Company Tax Group. The Company shall allow
Delsener/Xxxxxx Holdings and its counsel to participate, at its own expense, in
any audits of the Company's consolidated federal income tax returns to the
extent that such returns relate to the Delsener/Xxxxxx Group. The Company will
not settle any such audit in a manner which would adversely affect the
Delsener/Xxxxxx Group
-44-
after the Spin Off Date without the prior written consent of Delsener/Xxxxxx
Holdings, which consent shall not unreasonably be withheld.
(iv) The Company shall immediately pay to Delsener/Xxxxxx Holdings
any tax refund (or reduction in tax liability) resulting from a carry back of a
post-acquisition tax attribute of any of the Delsener/Xxxxxx Group into the
Company's consolidated tax return, when such refund or reduction is realized by
the Company Tax Group. The Company will cooperate with the Delsener/Xxxxxx
Group in obtaining such refunds (or reduction in tax liability), including
through the filing of amended tax returns or refund claims. Delsener/Xxxxxx
Holdings will indemnify the Company for any Taxes resulting from the
disallowance of such post-acquisition tax attribute on audit or otherwise.
(v) The Company shall not elect to retain any net operating loss
carryovers or capital loss carryovers of the Delsener/Xxxxxx Group.
(vi) Delsener/Xxxxxx Holdings shall indemnify the Company Tax
Group for any Taxes arising from any gain, realized by the Company arising out
of, based upon or attributable to the Spin Off to the extent that such taxable
income exceeds the net operating losses of the Company that are available to
the Company in the taxable year of the Spin Off (without regard to subsequent
taxable years) to shelter such taxable income for purposes of computing the
federal income tax liability of the Company Tax Group. The Company agrees to
consult in good faith with Delsener/Xxxxxx Holdings regarding the amount of
gain, if any, recognized by the Company as a result of the Spin Off.
(d) The Spin Off Documentation shall provide for the registration
under applicable federal and state securities laws of the distribution of
securities of Delsener/Xxxxxx Holdings in the Spin Off and the exercise of the
Warrants if such registration is either required under applicable law or would
otherwise be required to cause such securities to be freely transferable by
Persons not Affiliates of Delsener/Xxxxxx Holdings, and customary
representations and warranties regarding information contained in the
Registration Statement and other filings made with the SEC in connection with
the Spin Off.
(e) The Spin Off Documentation shall provide that the Company shall
obtain all necessary third party consents to the Spin Off except where the
failure to obtain such consents, in the aggregate, would not (i) have a
Material Adverse Effect on the Company, (ii) impair the ability of the Company
to perform its obligations under the Transaction Documents in any material
respect or (iii) delay in any material respect or prevent the consummation of
any of the transactions contemplated by the Transaction Documents. The Spin Off
Documentation shall provide that the Spin Off shall be done in compliance with
the Company's certificate of incorporation and by-laws and in material
compliance with all applicable laws and shall be subject to obtaining all
applicable consents of Governmental Entities.
-45-
(f) (i) At the time of the Spin Off, Delsener/Xxxxxx Holdings shall
assume that certain Lease Agreement dated May 1, 1986, as amended, between AR
DE Realty Corp., N.V. and Xxxxxxxxx-Xxxxx Communications Management
Corporation, assumed by the Company, and that certain Lease Agreement dated May
27, 1997, between HIRO Real Estate Co. and the Company (the "Leases"), debt and
liabilities incurred by Delsener/Xxxxxx or Xxxxxxxx/Xxxxxx Holdings or their
respective Subsidiaries after the date hereof in connection with acquisitions
and capital expenditures approved by their respective Boards of Directors and
such other debt and liabilities as Delsener/Xxxxxx Holdings deems appropriate.
The Company shall cause Delsener/Xxxxxx Holdings and its Subsidiaries to be
released from all other debt and accrued liabilities.
(ii) The Delsener/Xxxxxx Group shall be entitled to all accounts
receivable relating to the Entertainment Business of the Company.
(iii) The Company shall, or shall cause its Subsidiaries to, as
applicable, contribute, transfer or convey to Delsener/Xxxxxx Holdings, prior
to the Spin Off, the assets described in Section 5.07(f)(iii) of the Company
Disclosure Schedule, and Delsener/Xxxxxx shall assume all of the Company's and
such Subsidiaries obligations under such agreements to the extent set forth on
such schedule.
(g) The Spin Off Documentation shall not include any representations
or warranties by the Company relating to the business, operations, assets,
debts or liabilities of Delsener/Xxxxxx Holdings or its Subsidiaries.
(h) On the Closing Date, the employees of the Company listed in
Section 5.07(h) of the Company Disclosure Schedule (the "Spin Off Employees")
shall be offered full-time employment by Delsener/Xxxxxx Holdings or one of its
Subsidiaries. If the Spin Off occurs prior to the Closing Date, such employees
shall continue to be employed by the Company (at the Company's expense), but
shall devote such time as deemed reasonably necessary, consistent with their
obligations to the Company, in support of the conduct of the Entertainment
Business by the Delsener/Xxxxxx Group on a basis consistent with the time and
scope of services that such employees devoted and provided to the Entertainment
Business prior to the Spin Off. Effective immediately prior to the Effective
Time, Delsener/Xxxxxx Holdings shall assume all obligations arising under any
employment agreement or arrangement (written or oral) between the Company or
any of its Subsidiaries and the Spin Off Employees other than the rights, if
any, of the Spin Off Employees to receive the options upon termination
following a change of control as defined in their respective employment
agreements (the "Termination Options") immediately prior to the Effective Time
(with such Termination Options being deemed granted as of such time) and all
existing rights to indemnification. Such assumption agreement shall provide
that the Company and its Subsidiaries, effective as of the Effective Time (or
effective as of the Spin Off Date as to any member of the Spin Off Employees
that devotes substantially all of his or her business time to the Entertainment
Business) shall be indemnified by Delsener/Xxxxxx Holdings from all obligations
arising under such employment agreements or arrangements (except in respect of
the Termination Options and all existing rights to indemnification). The
above-described assumption agreement shall also provide
-46-
that the Company and its Subsidiaries (other than the Delsener/Xxxxxx Group)
shall release the Executive Group from all Claims by the Company or its
Subsidiaries (other than the Delsener/Xxxxxx Group) except for Claims arising
from or attributable to the transactions contemplated by this Agreement or any
other Transaction Document or otherwise asserted prior to the Effective Time.
The Delsener/Xxxxxx Group shall not solicit the employment of any employees of
the Company or its Subsidiaries not currently engaged in the Entertainment
Business.
(i) (i) In the event that the Spin Off occurs prior to the Closing
Date then on the Spin Off Date, the management of the Company shall make an
allocation of working capital between Delsener/Xxxxxx Holdings and the Company,
consistent with the proper operation of the Company in its usual, regular and
ordinary course, and the Company shall deliver to Delsener/Xxxxxx Holdings, in
immediately available funds by wire transfer to such bank account as
Delsener/Xxxxxx Holdings shall specify, any positive amount allocated to
Delsener/Xxxxxx Holdings.
(ii) Not less than five business days prior to the Closing Date,
the Company shall deliver to Delsener/Xxxxxx Holdings a good faith estimate of
Working Capital (as defined in Section 5.07(i)(iv)) as of the Closing Date (the
"Estimated Working Capital") accompanied by a certificate by the Chief
Executive Officer and Chief Financial Officer of the Company certifying that
the Estimated Working Capital has been calculated in accordance with this
Agreement. If the Estimated Working Capital is a positive number, then at the
Closing the Company shall deliver to Delsener/Xxxxxx Holdings, in immediately
available funds by wire transfer to such bank account as Delsener/Xxxxxx
Holdings shall specify, an amount of cash equal to the Estimated Working
Capital. If the Estimated Working Capital is a negative number, then at the
Closing the Company shall cause Delsener/Xxxxxx Holdings to deliver, and
Delsener/Xxxxxx Holdings shall deliver to the Company, in immediately available
funds by wire transfer to such bank account as the Company shall specify, an
amount of cash equal to the Estimated Working Capital.
(iii) (A) As soon as practicable after the Closing Date, the
Company will prepare a statement of Working Capital as of the Closing Date,
which will be audited by Ernst & Young LLP (the "Company's Working Capital
Statement") at the expense of the Company. The Company will deliver the
Company's Working Capital Statement to Delsener/Xxxxxx Holdings as soon as
practicable and in any event within ninety days after the Closing Date. If
within fifteen days following delivery of the Company's Working Capital
Statement to Delsener/Xxxxxx Holdings, Delsener/Xxxxxx Holdings has not given
the Company notice of its objection to the Company's Working Capital Statement
(such notice must contain a statement of the basis of such objection), then the
Working Capital reflected on the Company's Working Capital Statement shall be
deemed final and conclusive and shall be the "Final Working Capital." If
Delsener/Xxxxxx Holdings gives such notice of objection within the fifteen day
period, then the issues in dispute will be submitted to a "big six" accounting
firm (other than Ernst & Young LLP) to be selected jointly by Delsener/Xxxxxx
Holdings and the Parent within the following fifteen days or, if they fail to
agree, such accounting firm shall be Xxxxxx Xxxxxxxx (Chicago office) (it being
understood that the Chicago office of Xxxxxx Xxxxxxxx was chosen because of
representations made that neither Parent and its Affiliates or the Company and
its Affiliates have a material relationship with such office and
-47-
if any of such parties prior to the calculation of the Final Working Capital
develops a material relationship with such office, the party having such a
relationship shall promptly notify the other party of such relationship and the
parties will select another office of Xxxxxx Xxxxxxxx or another "big six"
accounting firm with which none of such parties has a material relationship to
serve as the accountants) (the "Accountants"), for resolution and the
Accountants shall determine the "Final Working Capital" within thirty days
after the dispute is submitted to them. If issues in dispute are submitted to
the Accountants for resolution, (i) each party will furnish to the Accountants
such work papers and other documents and information relating to the disputed
issues as the Accountants may request and are available to that party or its
Subsidiaries (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (ii) the
determination by the Accountants of Final Working Capital, as set forth in a
notice delivered to both parties by the Accountants, will be binding and
conclusive on the parties; and (iii) Delsener/Xxxxxx Holdings and the Company
will each bear one-half of the fees and expenses of the Accountants for such
determination. The Company shall make its employees and books and records
available to Delsener/Xxxxxx Holdings for purposes of verifying Final Working
Capital and shall cause Ernst & Young LLP to make its work papers used in
determining Final Working Capital available to Delsener/Xxxxxx Holdings.
(B) On the third business day following the determination of the Final
Working Capital (the "Payment Date"), (i) if the Working Capital Adjustment
Amount (as defined below) is a positive number, then the Company will pay such
amount to Delsener/Xxxxxx Holdings in immediately available funds by wire
transfer to such bank account as Delsener/Xxxxxx Holdings shall specify and
(ii) if the Working Capital Adjustment Amount is a negative number, then
Delsener/Xxxxxx Holdings will pay such amount to the Company in immediately
available funds by wire transfer to a bank account specified by the Company.
Notwithstanding the foregoing, if Delsener/Xxxxxx Holdings has notified the
Company in writing prior to the Payment Date that it wishes to have all or any
portion of the Final Working Capital (such amount, the "Consideration
Adjustment") treated as an adjustment to the Class A Common Stock Merger
Consideration and the Class B Common Stock Merger Consideration, the Class A
Common Stock Merger Consideration and the Class B Common Stock Merger
Consideration shall be increased by an amount equal to the quotient of the
Consideration Adjustment divided by the fully diluted number of shares of
Common Stock outstanding immediately prior to the Effective Time, and the
Company shall (1) promptly distribute the appropriate amount to the appropriate
holders, immediately prior to the Effective Time, of Common Stock and Series D
Preferred Stock, (2) promptly distribute upon exercise the appropriate amount
to holders of Options, Warrants and Unit Purchase Options unexercised
immediately prior to the Effective Time, and (3) promptly distribute the
appropriate amount to holders of Options, Warrants, and Unit Purchase Options
who exercised such securities on and after the Effective Time and prior to the
Payment Date; provided that as a condition precedent to the Company's
obligations under this sentence, Delsener/Xxxxxx Holdings shall have paid to
the Company in immediately available funds by wire transfer to an account
specified by the Company the difference, if any, between the Consideration
Adjustment and the Working Capital Adjustment Amount so that the aggregate net
amount to be paid or received by the Company, as the case may
-48-
be, pursuant to this sentence is equal to the amount that would have been paid
or received, as the case may be, pursuant to the first sentence of this
paragraph had the Consideration Adjustment not been made.
(iv) The term "Working Capital" shall mean, as of the point in
time immediately prior to the Effective Time, the sum of all current assets of
the Company and its consolidated Subsidiaries minus the sum of all current
liabilities of the Company and its consolidated Subsidiaries, each as
determined in accordance with GAAP applied on a basis consistent with the
balance sheet of the Company as of June 30, 1997 included in the Company SEC
Documents (provided that no liabilities or reserves reflected on such balance
sheet shall be reduced or eliminated except by reason of a payment or credit
occurring in the ordinary course of business and consistent with past
practices).
Notwithstanding the foregoing, Working Capital shall, without
duplication either in this computation or as between this computation and the
computation of Excess Debt, (i) be increased by the lesser of (A) 50% of all
fees and expenses incurred by the Company in connection with acquiring consents
from holders of the Series E Preferred Stock and the 2006 Notes in connection
with the transactions contemplated by this Agreement and (B) $1,000,000, (ii)
be increased by, if a positive number, or decreased by, if a negative number,
the product of (A) the Class A Common Stock Merger Consideration and (B) the
difference between 15,589,083 less the sum of the fully diluted number of
shares of Common Stock outstanding immediately prior to the Effective Time
(excluding the Xxxxxxx Shares (as defined below)) (calculated in a manner
consistent with Section 3.01(c)(i) of the Company Disclosure Schedule, such
calculation to include, without limitation, derivative securities that will
become issuable upon consummation of the transactions contemplated by this
Agreement), (iii) be reduced by the difference between $84,554,649 less the sum
of (A) the aggregate exercise price of all Options, Warrants and Unit Purchase
Options outstanding immediately prior to the Effective Time plus (B) the
aggregate exercise price of all Unit Purchase Option Warrants underlying Unit
Purchase Options outstanding immediately prior to the Effective Time plus (C)
the aggregate base price of all SARs outstanding immediately prior to the
Effective Time, (iv) be reduced by the product of (A) $42 and (B) the aggregate
number of shares of Common Stock subject to a right of repurchase in favor of
the Company (the "Xxxxxxx Shares") granted pursuant to that certain Agreement
of Merger dated February 12, 1997 among the Company, Nederlander of
Connecticut, Inc. and the other parties thereto outstanding immediately prior
to the Effective Time, (v) be increased by all capital expenditures paid by the
Company and its Subsidiaries after June 30, 1997 and immediately prior to the
Effective Time permitted by Section 4.01(a)(viii), (vi) be decreased by all
accrued capital expenditures of the Company as of immediately prior to the
Effective Time (to the extent not reflected in current liabilities), (vii) be
increased by dividends that have been accrued immediately prior to the
Effective Date whose regularly scheduled payment date has not then yet
occurred, (viii) except as required by clause (xi) below, exclude any
liabilities attributable to Indebtedness, (ix) exclude any liabilities included
in clauses (i) through (v) of the following sentence, (x) be decreased by
unpaid costs, fees and expenses of the Company arising out of, based upon or
that will arise from the transactions contemplated by this Agreement (other
than as a result of actions taken by Sub) (including, without limitation,
amounts related to the termination
-49-
of any employees, broker fees, legal, accounting and advisory fees and fees
incurred in connection with third party consents, waivers and amendments of
creditors or holders of Preferred Stock), and (xi) be reduced by the amount of
the Excess Debt, if a positive number, or be increased by the amount of the
Excess Debt, if a negative number.
The term "Excess Debt" shall mean, as of immediately prior to the
Effective Time, the difference between the sum of the following and
$899,700,000: (i) the difference between (A) Indebtedness of the Company and
its consolidated Subsidiaries less (B) the difference between $70,000,000 and
any amounts (other than the reimbursement of expenses) actually received by the
Company and its consolidated subsidiaries after the date hereof under
agreements relating to the sale or LMA (such LMA payments not to exceed $30,000
per month) of its WVGO-FM and the sale or LMA of its Xxxxxxx/Biloxi radio
stations, less (C) any Indebtedness incurred to finance acquisitions approved
by Parent of stock of or substantially all of the assets of radio stations,
less (D) interest accrued as of immediately prior to the Effective Time that is
not then due and payable, (ii) the Series B Merger Consideration, (iii) the
Series C Merger Consideration, (iv) the liquidation preference amount of the
Series E Preferred Stock, and (v) Environmental Costs or Liabilities accrued
and not paid after June 30, 1997 to the extent they exceed $100,000 in the
aggregate. "Working Capital Adjustment Amount" shall mean an amount equal to
the Final Working Capital, less the Estimated Working Capital, together with
interest on the absolute value of the difference at 10% per annum beginning on
the Closing Date and ending on the date of payment of the Working Capital
Adjustment Amount as provided in Section 5.07(i)(iii)(B).
Notwithstanding the foregoing, Working Capital shall not include any
asset transferred to Delsener/Xxxxxx Holdings or any of its Subsidiaries, any
liability assumed by Delsener/Xxxxxx Holdings, or any liability to which none
of the Company or any of its Subsidiaries is a party immediately after the
Effective Time and any such computation shall assume that the Spin Off has been
consummated.
(j) The Company may, in its sole discretion, (i) at any time prior to
the filing of the Proxy Statement with the SEC, dispose of its interest in
Delsener/Xxxxxx for any reason and in any manner, and (ii) at any time after
the Proxy Statement has been filed with the SEC, if the Spin Off would violate
applicable law or any material agreement to which the Company or any of its
Subsidiaries is a party, dispose of Delsener/Xxxxxx in any manner (an
"Alternate Transaction"); provided that in each such case the terms of such
disposition do not delay the consummation of the Merger, are not materially
more adverse to the Company or Parent than the Spin Off and any resulting
adverse financial changes are appropriately reflected in Working Capital; and
provided further that to the extent that any such disposition results in fixed
and determinable financial benefits to Parent when compared to the Spin Off,
the Class A Common Stock Merger Consideration and Class B Common Stock Merger
Consideration shall be adjusted in an aggregate amount equal to such increase
in benefits.
(k) At the request of Delsener/Xxxxxx and subject to the requirements
and restrictions imposed on the Company by any of its financing documents, the
Company shall from
-50-
time to time after the date hereof and prior to the Spin Off Date permit
Delsener/Xxxxxx to (i) acquire (whether by merger, stock or asset acquisition
or otherwise) additional businesses engaged in the business in which
Delsener/Xxxxxx is engaged or (ii) make capital improvements on assets owned or
leased by Delsener/Xxxxxx or its Subsidiaries, and in each such case loan
Delsener/Xxxxxx the funds with which to consummate such acquisitions and
capital improvements. All amounts borrowed by Delsener/Xxxxxx from the Company
pursuant to this clause (k) shall be paid by Delsener/Xxxxxx to the Company by
wire transfer of immediately available funds to a bank account specified by the
Company on the Spin Off Date and shall not be considered for purposes of
computing Working Capital under clause (i) of this Section 5.07. In furtherance
of the foregoing, the Company shall be entitled to increase the borrowing
availability under the Credit Agreement for such purposes. The Company shall
use its best efforts to obtain any waivers, consents or modifications under any
financing or other agreement of the Company required or desirable in connection
with such acquisitions or capital improvements.
(l) Notwithstanding anything in this Agreement to the contrary, the
consummation of the transactions contemplated by this Section 5.07 and in the
Spin Off Documentation or any action or inaction taken in furtherance thereof,
including without limitation any transaction to which neither the Company nor
any of its Subsidiaries (other than Delsener/Xxxxxx Holdings and its
Subsidiaries) is a party, shall not be deemed to be a breach of a
representation, warranty or covenant in this Agreement unless the foregoing,
except as otherwise specifically permitted hereunder, individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect on the
Company, impair the ability of the Company to perform its obligations under
this Agreement in any material respect or delay or prevent the consummation of
the transactions contemplated by this Agreement.
(m) The indemnification obligations referred to in this Section 5.07
shall survive the Spin Off Date for a period of six years and thereafter as to
any claims for indemnification asserted prior to the expiration of such period.
(n) Prior to the Spin Off Date, the Company and Delsener/Xxxxxx
Holdings shall obtain from Xxx Xxxxxxxx and Xxxxx Xxxxxx a release or waiver of
any rights that they may have to purchase or acquire all or part of the
Delsener/Xxxxxx Group.
(o) Prior to the Spin Off Date, Delsener/Xxxxxx Holdings shall assume
all obligations of the Company and its Subsidiaries arising under the Sunshine
Agreement and, if not terminated prior to the Spin Off Date, the agreement
described in Section 4.06 of the Company Disclosure Schedule. Prior to the Spin
Off Date, the Company shall accelerate the issuance of, and issue, any shares
of Common Stock contemplated by the Sunshine Agreement.
(p) The Spin Off Documentation shall provide that prior to the
Effective Time the Company shall, to the extent requested by Parent, cause the
Delsener/Xxxxxx Group to perform its obligations under the Spin Off
Documentation.
-51-
SECTION 5.08. Repayment of Indebtedness. At or prior to the Closing,
Parent shall cause all Indebtedness outstanding under the Credit Agreement to
be repaid and shall cause all lenders party to the Credit Agreement to
terminate and release all Liens on any property or assets (including, without
limitation, the stock of Delsener/Xxxxxx Holdings and its Subsidiaries and all
of their respective properties and assets) subject to the Spin Off or Alternate
Transaction, as applicable, securing such Indebtedness. Notwithstanding the
immediately preceding sentence, Parent may cause all Indebtedness under the
Credit Agreement to be refinanced in full or may obtain waivers to any breaches
of the Credit Agreement that the transactions contemplated herein would cause
so long as (a) any such refinancing or the obtaining of such waivers would not
adversely affect any consent obtained by the Company to implement the Spin Off
or Alternate Transaction and (b) all Liens on any property or assets (including
without limitation the stock of Delsener/Xxxxxx Holdings and its Subsidiaries
and all of their respective properties and assets) subject to the Spin Off or
Alternate Transaction, as applicable, securing such indebtedness shall be
released at or prior to the Closing.
SECTION 5.09. Closing Extension. Parent may extend the initial
Termination Date set forth in Section 7.01(b)(ii) for up to three calendar
months, in one calendar month intervals, by providing the Company notice of its
election to do so not later than five days prior to the then scheduled
Termination Date. In the event that Parent elects to extend the Termination
Date pursuant to the immediately preceding sentence, the Class A Common Stock
Merger Consideration and the Class B Common Stock Merger Consideration shall
each be increased by $1.00 for each calendar month that the Termination Date is
extended beginning on the first day of each such month provided, however, that
no such increase shall be paid if (i)(A) all conditions to the obligations of
Parent and Sub to effect the Merger set forth in Section 6.01 and Section 6.02
have been satisfied except for the conditions set forth in Sections 6.01(b) and
6.01(c) and (B) the failure to satisfy the conditions set forth in Sections
6.01(b) and 6.01(c) is primarily the result of Acts or Changes or (ii) (A) the
Merger shall be restrained or otherwise prohibited by a temporary or
preliminary judicial order, decree, ruling or other action arising from claims
or litigation involving the Company and its stockholders (collectively, the
"Preliminary Order") and (B) Parent delivers to the Company prior to the
applicable Termination Date written notice to the effect that it shall
consummate the Merger within ten business days after the lifting or withdrawal
of the Preliminary Order; provided that if, within ten business days after the
date of the lifting or withdrawal of the Preliminary Order, Parent fails to
consummate the Merger and such failure is not due to the Company's failure to
fulfill any of its obligations contained in Section 6.01 and Section 6.02, the
Class A Common Stock Merger Consideration and the Class B Common Stock Merger
Consideration shall be increased by $2.00 for each calendar month (or partial
calendar month) after the initial Termination Date provided for herein. In the
event that the Preliminary Order has not been lifted or withdrawn by the close
of business on August 31, 1998, then either Parent or the Company may extend
the date of the Closing for an additional 45 days by delivering, prior to
September 1, 1998, written notice to the other party to such effect. In the
event that (x) neither Parent nor the Company elects to extend the Closing for
such additional 45-day period or (y) either Parent or the Company elects to
extend the Closing for such 45-day period and the Preliminary Order has not
been lifted or withdrawn prior to the end of such 45-day period, then this
Agreement shall terminate without any liability or obligation on the part of
either party other
-52-
than payment of fees and expenses pursuant to Section 5.05(a) and the
obligation to release the Letter of Credit to Parent.
SECTION 5.10. [Intentionally Omitted]
SECTION 5.11. Change of Name. Within 10 business days after the
Closing, Parent shall cause Surviving Corporation and each of its Subsidiaries,
if necessary, to file certificates of amendment with the appropriate Secretary
of State, amending such company's certificate of incorporation to change the
name of such Company to any name which does not include the letters "SFX". At
the Closing, Parent will assign to Delsener/Xxxxxx Holdings or its designee all
right, title and interest, including all the good will related thereto, in and
to the name "SFX" together with all causes of action and the right to recover
for past infringements of the name "SFX." As soon as commercially practicable,
but in no event later than six months from the Closing Date, Parent shall cease
all use of the name "SFX" in all modes.
SECTION 5.12. Outstanding Indebtedness. Except as contemplated in
Section 5.07, as of immediately prior to the Effective Time the Company shall
take such action so as to cause the outstanding indebtedness of the Company for
borrowed money (excluding leases) to consist only of the Notes and borrowings
under the Credit Agreement, as it may be amended in accordance with Section
5.07.
SECTION 5.13. Entertainment Business. In the event that the
transactions contemplated by Section 5.07 are not consummated at or prior to
the Closing and Parent nonetheless waives the condition set forth in Section
6.02(e), the Class A Merger Consideration and the Class B Merger Consideration
shall be increased by the quotient of $42,500,000 divided by the fully diluted
number of shares of Common Stock outstanding immediately prior to the Effective
Time.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Stockholder Approval shall have been
obtained.
(b) FCC Consents. The FCC shall have issued the FCC consent ("FCC
Consent") approving the applications for transfer of control of the FCC
Licenses for the operation of the Licensed Facilities in connection with the
Merger.
-53-
(c) HSR Act. The applicable waiting period under the HSR Act shall
have expired or terminated.
(d) No Injunctions or Restraints. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order enacted, entered, promulgated, enforced or issued by
any court of competent jurisdiction or other Governmental Entity preventing the
consummation of the Merger shall be in effect.
SECTION 6.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case as of such date), and except
to the extent the failure of such representations and warranties to be true and
correct would not, in the aggregate, have a Material Adverse Effect on the
Company. Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer of the
Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such effect.
(c) Final Order. The FCC Consent shall not contain any conditions that
would be materially adverse to either the Parent, the Surviving Corporation or
their Affiliates. The FCC Consent shall be a Final Order. A "Final Order" shall
be an action by the FCC (i) which has not been reversed, stayed, enjoined, set
aside, annulled or suspended, (ii) with respect to which no timely request for
stay or review, petition for reconsideration or appeal has been filed by a
non-party to this Agreement (or an Affiliate of Parent) or the FCC Applications
or sua speonte action of the FCC with comparable effect is pending and (iii) as
to which the normal time for filing any such request, petition or appeal or for
the taking of any such sua speonte action by the FCC has expired.
(d) Release Agreements. The following shall have been obtained (i) the
Release Agreement from each member of the Executive Group as contemplated in
Section 4.05 and (ii) the assumption agreements contemplated in Section
5.07(h).
(e) Delsener/Xxxxxx. The Spin Off or an Alternate Transaction shall
have been consummated.
-54-
(f) Third Party Consents. All Third Party Consents shall have been
obtained other than those the failure of which to obtain would not have a
Material Adverse Effect on the Company.
Notwithstanding anything herein to the contrary, the obligations of
Parent and Sub to effect the Merger shall not be subject to the consummation of
any of the acquisitions, dispositions, exchanges or other transfers of assets
which are contemplated by Section 4.01(a) of the Company Disclosure Schedule.
SECTION 6.03. Conditions to Obligation of the Company. The obligation
of the Company to effect the Merger is further subject to satisfaction or
waiver of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Sub set forth in this Agreement shall be true and correct as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case as of such date), and except
to the extent the failure of such representations and warranties to be true and
correct would not, in the aggregate, have a Material Adverse Effect on Parent's
ability to perform its obligations hereunder. The Company shall have received a
certificate signed on behalf of Parent by an executive officer of Parent to
such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall
have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of Parent by an
executive officer of Parent to such effect.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated prior to
the Effective Time whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent, Sub and the Company by mutual
action of their respective Boards of Directors;
-55-
(b) by either Parent or the Company:
(i) (A) if, upon a vote at a duly held Stockholders Meeting or any
adjournment thereof at which the Stockholder Approval shall have been voted
upon, the Stockholder Approval shall not have been obtained or (B) unless (1)
prohibited by an event described in either clause (iii) or (v) of this Section
7.01(b) or (2) resulting from any act or omission of Parent or Sub or their
Affiliates, as of the day immediately prior to the Termination Date either (x)
no Stockholders Meeting shall have been held or (y) if held no vote shall have
been taken in respect of the Stockholder Approval;
(ii) if the Merger shall not have been consummated on or before
the Termination Date; the term Termination Date shall mean (A) May 31, 1998 or
(B) if such date has been extended by Parent as provided in Section 5.09, the
date as so extended;
(iii) if any Governmental Entity shall have issued an order,
injunction, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise permanently prohibiting the Merger and such order,
injunction, decree, ruling or other action shall have become final and
nonappealable (other than a judicial order, decree, ruling or other action
contemplated by Section 7.01(b)(v));
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set forth in
Section 6.02(a) or (b) or Section 6.03(a) or (b), as applicable, and (B) cannot
be or has not been cured within thirty (30) days after the giving of written
notice to the breaching party of such breach provided in no event shall such
thirty (30) day period extend beyond the Termination Date (a "Material Breach")
(provided that the terminating party is not then in Material Breach of any
representation, warranty, covenant or other agreement contained in this
Agreement); or
(v) if the Merger shall have been permanently restrained, enjoined
or otherwise permanently prohibited by a judicial order, decree, ruling or
other action arising from Claims or litigation involving the Company and its
stockholders;
(c) by the Company prior to obtaining the Stockholder Approval, if (i)
the Board of Directors of the Company shall have determined in good faith,
based on the advice of outside counsel, that it is necessary, in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law, to terminate this Agreement to enter into an agreement with respect to or
to consummate a transaction constituting a Superior Proposal, (ii) the Company
shall have given notice to Parent advising Parent that the Company has received
a Superior Proposal from a third party, specifying the material terms and
conditions of such Superior Proposal (including the identity of the third
party) and the material terms and conditions of any agreements or arrangements
to be entered into in connection with a Superior Proposal with respect to the
Principal Stockholder
-56-
and that the Company intends to terminate this Agreement in accordance with
this Section 7.01(c), and (iii) either (A) Parent shall not have revised its
takeover proposal within five business days after the date on which such notice
is deemed to have been given to Parent, or (B) if Parent within such period
shall have revised its takeover proposal, the Board of Directors of the
Company, after receiving advice from the Company's financial advisor, shall
have determined in its good faith reasonable judgment that the third party's
Takeover Proposal is superior to Parent's revised takeover proposal; provided
that the Company may not effect such termination pursuant to this Section
7.01(c) unless the Company has contemporaneously with such termination tendered
payment to Parent, or its designee, of the Termination Fee and the
Reimbursement Amount (if and to the extent that Parent has provided to the
Company documentation reasonably acceptable to the Company in support of the
amounts claimed) that is due Parent or its designee pursuant to Section 5.05;
or
(d) by Parent if (i) the Board of Directors or the Independent
Committee of the Company shall have failed in the Proxy Statement to make the
recommendation contemplated by Section 4.03, (ii) a tender offer or exchange
offer for 50% or more of the outstanding shares of capital stock of the Company
is commenced (other than by the Company or its Affiliates) and the Board of
Directors of the Company fails to timely recommend against the stockholders of
the Company tendering their shares into such tender offer or exchange offer, or
(iii) a Takeover Proposal has been publicly announced by the Company and the
Board of Directors of the Company shall fail to publicly reaffirm its approval
or recommendation of the Merger and this Agreement on or before the tenth
business day following the date on which such Takeover Proposal shall have been
announced; provided that Parent in exercising its termination rights hereunder
may condition the effectiveness of such termination upon receipt of the
Termination Fee and Reimbursement Amount (if and to the extent that Parent has
provided to the Company documentation reasonably acceptable to the Company in
support of the amounts claimed) that are due Parent or its designee pursuant to
Section 5.05.
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 7.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, (i) other
than the provisions of the last sentence of Section 5.01, Section 5.05, this
Section 7.02 and Article VIII, and (ii) except to the extent that such
termination results from the Material Breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, in which case subject to Section 5.05 the non-breaching party will
be entitled to recover damages and its Expenses.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this
-57-
Agreement shall survive the Effective Time. This Section 8.01 shall not limit
any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or sent
by overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, Xx.
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
and
(b) if to the Company, to
SFX Broadcasting, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
-58-
with a copy to:
For the Company:
Xxxxx & XxXxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx
and
For the Independent Committee:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "Affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person;
(b) "Entertainment Business" means the business of venue ownership,
operation and management and the booking, promotion and/or production of
entertainment events and shall include, without limitation, related
merchandising, concession management and Internet-based marketing;
(c) "Environmental Laws" means all applicable laws and rules of common
law pertaining to the environment and natural resources, including the
Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C.
ss. 9601 et seq.) ("CERCLA"), the Emergency Planning and Community Right to
Know Act, the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act, the Hazardous and Solid Waste
Amendments Act of 1984, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, the Oil Pollution Act of
1990, the Hazardous Materials Transportation Act, and any similar an analogous
statutes, regulations and decisional law of any governmental authority, as each
of the foregoing may be amended and in effect on or prior to the Closing;
(d) "Expenses" has the meaning assigned thereto in Section 5.05(d);
(e) "Indebtedness" has the meaning assigned thereto in Section
3.01(p)(ii);
-59-
(f) "Material Adverse Change" or "Material Adverse Effect" means, when
used in connection with the Company or Parent, any change, effect, event or
occurrence that is materially adverse to the business, properties, assets,
condition (financial or otherwise) or results of operations of such party and
its Subsidiaries taken as a whole, other than any change, effect, event or
occurrence relating to the United States economy in general or to the United
States radio broadcasting industry in general, and, as applicable, not
specifically relating to the Company or Parent or their respective
Subsidiaries;
(g) "Permitted Liens" has the meaning assigned thereto in Section
3.01(u)(iv);
(h) "Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity;
(i) a "Significant Subsidiary" means any Subsidiary of the Company or
Parent, as applicable, that constitutes a significant subsidiary within the
meaning of Rule 1-02 of Regulation S-X of the SEC;
(j) a "Subsidiary" of any Person means another Person, an amount of
the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors
or other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such first
Person;
(k) "Superior Proposal" means (x) a bona fide Takeover Proposal to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the shares and/or voting power of Common Stock
then outstanding or all or substantially all the assets of the Company, and (y)
otherwise on terms which the Board of Directors of the Company determines in
its good faith reasonable judgment to be more favorable to the Company's
stockholders than the Merger (based on the written opinion, with only customary
qualifications, of the Company's independent financial advisor that the value
of the consideration provided for in such proposal is superior to the value of
the consideration provided for in the Merger), for which financing, to the
extent required, is then committed or which, in the good faith reasonable
judgment of the Board of Directors of the Company, based on advice from the
Company's independent financial advisor, is reasonably capable of being
financed by such third party and for which the Board of Directors of the
Company determines, in its good faith reasonable judgment, that such proposed
transaction is reasonably likely to be consummated without undue delay;
(l) "Takeover Proposal" means any proposal for a merger, consolidation
or other business combination involving the Company or any proposal or offer to
acquire in any manner, directly or indirectly, an equity interest in, any more
than 25% of the voting power of, or a substantial portion of the assets of, the
Company and its Subsidiaries, taken as a whole, other than the
-60-
transactions contemplated by this Agreement; provided, however, that such
term does not include the transactions contemplated hereby or in any ancillary
documents;
(m) "Taxes" has the meaning assigned thereto in Section 3.01(j)(viii);
and
(n) "Company Disclosure Schedule" means the Disclosure Schedule
delivered by the Company to Parent prior to the execution of this Agreement.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to an Article, Section or Annex, such reference shall be to an
Article or Section of, or an Annex to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns and, in
the case of an individual, to his heirs and estate, as applicable.
SECTION 8.05. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement and (b) except for
the provisions of Article II, and Section 5.04, are not intended to confer upon
any Person other than the parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
-61-
SECTION 8.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, whether by operation of law or otherwise; provided, however,
that (i) upon notice to the Company and without releasing Parent or Sub from
any of their obligations or liabilities hereunder, Parent or Sub may assign or
delegate any or all of their rights or obligations under this Agreement to any
Affiliate thereof so long as such assignment or delegation does not delay the
Closing, and (ii) nothing in this Agreement shall limit Parent's or Sub's
ability to make a collateral assignment of its rights under this Agreement to
any institutional lender that provides funds to Parent or Sub without the
consent of the Company. The Company shall execute an acknowledgment of such
assignment(s) and collateral assignments in such forms as Parent or its
institutional lenders may from time to time reasonably request; provided,
however, that unless written notice is given to the Company that any such
collateral assignment has been foreclosed upon, the Company shall be entitled
to deal exclusively with Parent as to any matters arising under this Agreement
or any of the other agreements delivered pursuant hereto. In the event of such
an assignment, the provisions of this Agreement shall inure to the benefit of
and be binding on such assignees.
SECTION 8.09. Enforcement. The Company agrees that irreparable damage
would occur and that Parent would not have any adequate remedy at law in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that Parent shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Federal court sitting in the State of
Delaware or a Delaware state court.
SECTION 8.10. Director and Officer Liability. The directors, officers,
and stockholders of Parent and its Affiliates shall not have any personal
liability or obligation arising under this Agreement (including any Claims that
the Company may assert) other than as an assignee of this Agreement or as
otherwise provided herein. Except to the extent that a person is a party
signatory thereto in his personal capacity, the directors, officers and
stockholders of the Company and their respective Affiliates shall not have any
personal liability or obligation arising under this Agreement (including any
Claims that Parent or Sub may assert).
SECTION 8.11. Termination Date. Notwithstanding any provision of this
Agreement to the contrary, in the event that any Termination Date provided for
hereunder shall fall on a non-Business Day, then such Termination Date shall
automatically be extended to the first Business Day following such scheduled
Termination Date. The term "Business Day" shall mean any
-62-
day, other than a Saturday, Sunday or a day on which banking institutions in
the City of New York, State of New York, are required or authorized by law to
close.
[The rest of this page has intentionally been left blank.]
-63-
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
SBI HOLDING CORPORATION
By: /s/ Xxxx Xxxxxx
--------------------------------
Name:
Title:
SBI RADIO ACQUISITION CORPORATION
By: /s/ Xxxx Xxxxxx
--------------------------------
Name:
Title:
SFX BROADCASTING, INC.
By: /s/ Xxxxxx F.X. Sillerman
--------------------------------
Name: Xxxxxx F.X. Sillerman
Title: Executive Chairman
-64-
